Welcome to DU!
The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards.
Join the community:
Create a free account
Support DU (and get rid of ads!):
Become a Star Member
Latest Breaking News
General Discussion
The DU Lounge
All Forums
Issue Forums
Culture Forums
Alliance Forums
Region Forums
Support Forums
Help & Search
STOCK MARKET WATCH -- Friday, 17 October 2014
[font size=3]STOCK MARKET WATCH, Friday, 17 October 2014[font color=black][/font]
SMW for 16 October 2014
AT THE CLOSING BELL ON 16 October 2014
[center][font color=red]
Dow Jones 16,117.24 -24.50 (-0.15%)
[font color=green]S&P 500 1,862.76 +0.27 (0.01%)
Nasdaq 4,217.39 +2.07 (0.05%)
[font color=red]10 Year 2.15% +0.11 (5.39%)
30 Year 2.94% +0.10 (3.52%) [font color=black]
[center][/font]
[HR width=85%]
[font size=2]Market Conditions During Trading Hours[/font]
[center]
(click on link for latest updates)
http://tools.investing.com/market_quotes.php?
[/center]
[font size=2]Euro, Yen, Loonie, Silver and Gold[center]
[/center]
[center]
[/center]
[/center]
[HR width=95%]
[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
[center]
Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
[/center]
[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
[center]
The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
Wall Street on Parade
[/center]
[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
[center]
Matt Taibi: Secret and Lies of the Bailout
[/center]
[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
[center]
LegitGov
Open Government
Earmark Database
USA spending.gov
[/center][font color=black][font size=2]Handy Links - Videos:[/font][/font]
[center]
Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
[/center]
[div]
[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts
[HR width=95%]
[center]
[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]
33 replies
= new reply since forum marked as read
= new reply since forum marked as read
http://www.reuters.com/article/2014/10/16/us-commerzbank-probes-exclusive-idUSKCN0I50CR20141016?feedType=RSS&feedName=businessNews
Commerzbank AG's settlement with U.S. authorities over alleged sanctions violations has been postponed, possibly until the end of the year, as prosecutors seek to coordinate the resolution of a separate probe stemming from transactions at the German bank connected to the massive Olympus Corp accounting fraud, according to people familiar with the matter.
Commerzbank had been primed to settle with U.S. regulators and prosecutors by the end of September over its dealings with Iran and other countries under U.S. sanctions, Reuters has reported. The sanctions settlement was expected to cost the bank about $650 million, people familiar with the deal have told Reuters, and the bank had been expected to enter into deferred prosecution agreements with prosecutors that would suspend criminal charges.
But the accord was put on ice after the Manhattan U.S. Attorney's office, which is not involved in the sanctions deal, looked into the bank's records in connection with the $1.7 billion accounting fraud at Japan's Olympus, said two sources who did not want to be identified. Other people with knowledge of the matter did not dispute the reasons for the delay.
The total amount for a coordinated settlement is now expected to cost Commerzbank more than $650 million, one of the two sources said, but the person did not provide a new estimate....
TAKING ANOTHER STAB AT THE WICKED WITCH OF THE EAST GERMANY...
Commerzbank AG's settlement with U.S. authorities over alleged sanctions violations has been postponed, possibly until the end of the year, as prosecutors seek to coordinate the resolution of a separate probe stemming from transactions at the German bank connected to the massive Olympus Corp accounting fraud, according to people familiar with the matter.
Commerzbank had been primed to settle with U.S. regulators and prosecutors by the end of September over its dealings with Iran and other countries under U.S. sanctions, Reuters has reported. The sanctions settlement was expected to cost the bank about $650 million, people familiar with the deal have told Reuters, and the bank had been expected to enter into deferred prosecution agreements with prosecutors that would suspend criminal charges.
But the accord was put on ice after the Manhattan U.S. Attorney's office, which is not involved in the sanctions deal, looked into the bank's records in connection with the $1.7 billion accounting fraud at Japan's Olympus, said two sources who did not want to be identified. Other people with knowledge of the matter did not dispute the reasons for the delay.
The total amount for a coordinated settlement is now expected to cost Commerzbank more than $650 million, one of the two sources said, but the person did not provide a new estimate....
TAKING ANOTHER STAB AT THE WICKED WITCH OF THE EAST GERMANY...
http://www.nakedcapitalism.com/2014/10/markets-panicked-deteriorating-fundamentals.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
The S&P 500 has been falling even more while I compose this this short post. It went from down over 2.2% to off 2.9% of this writing and the Dow went from down 2.1%. to down 2.6%, Ten-year Treasury yields dropped to below 2%. They recovered briefly to 2.05% but are now 1.99%. Oil fell sharply overnight.
Blooomberg has a raft of “panic is on” headlines on its site:
And Ebola fears are adding to traders’ rattled nerves.
One overview from the Financial Times:
Bloomberg on the race into Treasuries:
We’ve been pointing out for some time that conditions in the labor market are too weak to sustain any real recovery. The robust parts of the country have been riding on QE in various forms: energy development, financial services, and frothiness in Silicon Valley. But policymakers live in the Versailles that DC has become, and too many journalists are based in New York City, which is holding up nicely, and don’t get out to the rest of the country to see the distress beneath the veneer of normalcy. The shale bubble is popping now. And as Ed Harrison pointed out by e-mail:
Agreed. And given how central banks succeeded in their effort to divorce asset pricing from fundamentals, the groping for a new level while reality sets in may take some time. And an additional impact is use of algos and HFT. HFT drains liquidity in roiled markets. What looked benign on the way up is going to add fuel to the fire at times like this.
Update 1:45 PM: The latest from the Journal:
The “Fed can fix everything” premium has left the market.
The S&P 500 has been falling even more while I compose this this short post. It went from down over 2.2% to off 2.9% of this writing and the Dow went from down 2.1%. to down 2.6%, Ten-year Treasury yields dropped to below 2%. They recovered briefly to 2.05% but are now 1.99%. Oil fell sharply overnight.
Blooomberg has a raft of “panic is on” headlines on its site:
And Ebola fears are adding to traders’ rattled nerves.
One overview from the Financial Times:
One catalyst for the latest burst of risk aversion came from a batch of weak US data releases, which fuelled worries that the US economy might not be immune to a growth slowdown elsewhere.
“Global uncertainty is ravaging markets,” said Camilla Sutton, chief FX strategist at Scotiabank. “The weight of a deceleration in the global growth outlook, complicated by geopolitics and the threat of Ebola – and combined with strong oil supplies – is driving a wave of risk aversion in markets.”
The 10-year US government bond yield at one stage was down 34 basis points at 1.87 per cent – the biggest single-session fall since March 2009. By mid-morning in New York, it was back to 2.05 per cent, down 16bp on the day…
European stock markets suffered even greater losses. The FTSE Eurofirst 300 ended 3.2 per cent weaker at its lowest point since December while Greek stocks fell 6.3 per cent as 10-year borrowing costs in Athens – already above 7 per cent – soared by the most in 15 months amid growing concerns about the political situation in the country.
The turbulence in equity and bond markets followed the release of data showing that US retail sales fell 0.3 per cent in September. A sharp fall in the New York Fed’s manufacturing index this month added to the gloomy mood.
US producer prices eased 0.1 per cent last month, their first decline in a year.
“Global uncertainty is ravaging markets,” said Camilla Sutton, chief FX strategist at Scotiabank. “The weight of a deceleration in the global growth outlook, complicated by geopolitics and the threat of Ebola – and combined with strong oil supplies – is driving a wave of risk aversion in markets.”
The 10-year US government bond yield at one stage was down 34 basis points at 1.87 per cent – the biggest single-session fall since March 2009. By mid-morning in New York, it was back to 2.05 per cent, down 16bp on the day…
European stock markets suffered even greater losses. The FTSE Eurofirst 300 ended 3.2 per cent weaker at its lowest point since December while Greek stocks fell 6.3 per cent as 10-year borrowing costs in Athens – already above 7 per cent – soared by the most in 15 months amid growing concerns about the political situation in the country.
The turbulence in equity and bond markets followed the release of data showing that US retail sales fell 0.3 per cent in September. A sharp fall in the New York Fed’s manufacturing index this month added to the gloomy mood.
US producer prices eased 0.1 per cent last month, their first decline in a year.
Bloomberg on the race into Treasuries:
Trading volume in U.S. Treasuries is approaching the highest on record as investors drop wagers that the Federal Reserve will raise interest rates.
About $623 billion in U.S. government debt changed hands by 12 p.m. New York time, according to ICAP Plc, the world’s largest interdealer broker. That’s just below the record $662.2 billion traded on May 22, 2013, when former Fed Chairman Ben S. Bernanke mentioned the possibility of slowing bond purchases.
About $623 billion in U.S. government debt changed hands by 12 p.m. New York time, according to ICAP Plc, the world’s largest interdealer broker. That’s just below the record $662.2 billion traded on May 22, 2013, when former Fed Chairman Ben S. Bernanke mentioned the possibility of slowing bond purchases.
We’ve been pointing out for some time that conditions in the labor market are too weak to sustain any real recovery. The robust parts of the country have been riding on QE in various forms: energy development, financial services, and frothiness in Silicon Valley. But policymakers live in the Versailles that DC has become, and too many journalists are based in New York City, which is holding up nicely, and don’t get out to the rest of the country to see the distress beneath the veneer of normalcy. The shale bubble is popping now. And as Ed Harrison pointed out by e-mail:
As oil declines though, qe won’t help because risk premiums will stay elevated irrespective of where safe assets are trading. It is a perfect storm waiting to build because there are fewer safe assets and that will exacerbate the move.
There are a lot of places to look for where the credit bubble is about to detonate. And this could be the subprime ground zero that infects other bubblicious areas: think student loans, leveraged loans, other high yield. The Fed has simply caused a massive misallocation of capital. And eventually this will be found out in a big way.
There are a lot of places to look for where the credit bubble is about to detonate. And this could be the subprime ground zero that infects other bubblicious areas: think student loans, leveraged loans, other high yield. The Fed has simply caused a massive misallocation of capital. And eventually this will be found out in a big way.
Agreed. And given how central banks succeeded in their effort to divorce asset pricing from fundamentals, the groping for a new level while reality sets in may take some time. And an additional impact is use of algos and HFT. HFT drains liquidity in roiled markets. What looked benign on the way up is going to add fuel to the fire at times like this.
Update 1:45 PM: The latest from the Journal:
Selling accelerated in U.S. stocks on Wednesday as investors flocked to safe-haven government bonds.
U.S. stocks fell sharply Wednesday, as European markets also posted steep declines.
Stocks plunged to the day’s lows in early afternoon trading, with the Dow Jones Industrial Average falling 402 points, or 2.5%, to 15906. The blue-chip benchmark was on course to fall for the fifth day in a row, a drop that brought the index’s year-to-date decline to 4%.
The S&P 500 dropped 51 points, or 2.7%, to 1827, a decline that turned the index’s year-to-date return negative. The Nasdaq Composite Index fell 95 points, or 2.3%, to 4130, similarly erasing gains for the year.
Declines were broad and deep, with all 10 of the S&P 500’s sectors tumbling more than 1%.
“There’s a lot of pain out there,” said Dave Lutz, head of exchange-traded fund trading at JonesTrading Institutional Services.
The selloff marked a continuation of recent tumultuous trading sparked by fears of a global economic slowdown, dangerously low inflation in Europe and ripples from a steep drop in oil prices. Feeding the gloom Wednesday was a weaker-than-expected report on U.S. consumer spending. Traders said swings across financial markets appeared to be magnified by investors—particularly hedge funds—scrambling to exit money-losing investments.
U.S. stocks fell sharply Wednesday, as European markets also posted steep declines.
Stocks plunged to the day’s lows in early afternoon trading, with the Dow Jones Industrial Average falling 402 points, or 2.5%, to 15906. The blue-chip benchmark was on course to fall for the fifth day in a row, a drop that brought the index’s year-to-date decline to 4%.
The S&P 500 dropped 51 points, or 2.7%, to 1827, a decline that turned the index’s year-to-date return negative. The Nasdaq Composite Index fell 95 points, or 2.3%, to 4130, similarly erasing gains for the year.
Declines were broad and deep, with all 10 of the S&P 500’s sectors tumbling more than 1%.
“There’s a lot of pain out there,” said Dave Lutz, head of exchange-traded fund trading at JonesTrading Institutional Services.
The selloff marked a continuation of recent tumultuous trading sparked by fears of a global economic slowdown, dangerously low inflation in Europe and ripples from a steep drop in oil prices. Feeding the gloom Wednesday was a weaker-than-expected report on U.S. consumer spending. Traders said swings across financial markets appeared to be magnified by investors—particularly hedge funds—scrambling to exit money-losing investments.
IS THAT WHAT THEY CALL "MONEY LAUNDERING"? AN HONEST BANK?
http://www.nakedcapitalism.com/2014/10/dealbook-says-citi-afford-run-honest-bank-mexico.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29
DealBook, Andrew Ross Sorkin’s ethics-free paean to painless elite bank frauds – all the wealth and none of the accountability – has plumbed new depths in its coverage of Citi’s latest frauds. It has literally written that Citi “cannot afford” to run an honest bank in Mexico.
I’ll put aside for another day the obvious point that Citi does not run an honest bank in the U.S. so the authors’ implicit assumption that Citi’s problems arise from a corrupt Mexican culture is false and bigoted. For purposes of analysis only, I will discuss the logical implications of the DealBook’s “Blame it on Mexico” thesis. That thesis does not lead the NYT authors to ask Citi’s leaders to discuss which of three options it chose given that it cannot afford to run an honest bank in Mexico.
Instead, the NYT moves on – nothing to see here. DealBook and Citi’s leaders are not comfortable with this foreign concept of ethics. DealBook puts what it cares about in the title of its article: “Another Scandal Hits Citigroup’s Moneymaking Mexican Division.” Well, if fraudulent banking is “moneymaking” that makes it completely different. Indeed, DealBook emphasizes that Citi’s fraudulent and corrupt Mexican operation is not merely “moneymaking,” it “mints money.”
“Citi is wrestling with how to get its house in order in one of its oldest foreign operations. A crucial part of that decision rests on how to nudge aside the most powerful executive overseeing Mexico, a country where Citigroup has been doing business since 1929.
What makes that decision particularly difficult is that the Mexican unit, Banamex, mints money.”
What makes that decision particularly difficult is that the Mexican unit, Banamex, mints money.”
I will make a brief interjection as a criminologist with a research specialty in elite white-collar crime, particularly in finance: such a fraud often “mints money.” If DealBook believes that the fact that fraud and corruption typically “mints money” logically makes a “decision” by Citi to end the fraud “particularly difficult” then that belief damns Citigroup’s leaders and DealBook. Stopping fraud and corruption in a bank’s operations should be the paramount task of the bank’s leaders. The fact that the fraud and corruption “mints money” for a bank should be irrelevant to the “decision” by the bank’s leaders about how to respond to fraudulent and corrupt bank actions. The “decision” by the bank’s leaders about how to respond to a fraudulent and corrupt bank operation that “mints money” should not be “particularly difficult” – it should be among the easiest decisions they make all year. I know that Citi’s leaders and all but two of DealBook’s writers view what I am about to write as so naïve as to cause them to doubt what planet I inhabit, but I think that the fact that corporate fraud frequently “mints money” is one of the principal reasons that it is easy for honest CEOs to refuse to countenance fraud by their firms. They know that the fact that fraud and corruption “mints money” for the firm and the officers means that it wrong and means that if it not stamped out by the CEO it will cause vast harm to the public and, if there is any functional rule of law, it will eventually harm the firm. An honest bank CEO understands that she “cannot afford” to tolerate fraud and corruption. The worse the fraud and corruption, the more likely it is to “mint money” for the bank – right up to the point that someone begins to enforce the rule of law. At that point, the worse the fraud and corruption the bank engaged in the worse the bank’s fate. That is why the more profitable the fraud is for the ban the less the bank can afford the fraud to continue. We haven’t had an Attorney General for many years willing to enforce the criminal laws against elite banksters and the banks they control. The fact that elite banks and bankers can get away with committing a fraud that “mints money” should not, however, make the “decision” whether to allow fraud and corruption “particularly difficult” for an honest CEO.
The basis for Citi’s top managers’ decisions on where to operate in the world is based on reported profits.
“In other less profitable parts of the world, Citigroup is retreating. On Tuesday, the bank announced that it was selling its consumer business in 11 markets, across Latin America, Asia and Europe.”
Citi is getting out of banking in countries where it loses money and continuing to operate in a nation where it is profitable because of fraud and corruption that it “cannot afford” to end because it “mints money.”
“Mr. Medina-Mora’s business acumen and connections to the country’s ruling elite have made him critical to the bank’s success in Mexico. Citigroup and its chairman, Michael E. O’Neill, cannot afford to alienate Mr. Medina-Mora and risk jeopardizing those relationships, these people said. But the latest problems uncovered at Banamex are augmenting concerns about lax controls and oversight in Mexico.
Banamex has “lax controls and oversight” because Medina-Mora had decided to have “lax controls and oversight.”
A Bank Operation That “Mints Money” Is Too Good To Be True
The fact that Banamax reports that it “mints money” should be of great concern because it is “too good to be true.”
“Since the financial crisis, Citigroup executives have been trying to winnow the bank’s business lines and hone its strategy to focus on investment banking and more affluent consumers, particularly in the United States. That effort to simplify its operations gained urgency earlier this year after the Federal Reserve rejected the bank’s capital plan, citing concerns about its projections for potential losses in ‘material parts’ of its global operations.”
Let’s put together the intersection of finance, banking, and criminology required to analyze DealBook’s presentation of the facts. I’ve explained the criminology – an operation that “mints money” is most likely fraudulent. Under finance theory, there are only three ways that a non-fraudulent banking operation “mints money.”
- The banking operation could involve extreme risk. Such extreme risk may for a time produce very high reported profits, but it also creates a substantial risk that of causing major losses – precisely the risk the Federal Reserve warned about.
- The second possibility is that the bank has exceptional market power. It can overcharge for loans and underpay depositors, producing a far larger spread and profits. This kind of monopoly and monopsony power should be made illegal under the antitrust laws. It would be unambiguously harmful to Mexico and Mexicans.
- The third way to mint money in banking is to be a predatory lender. Absent extreme market power, consumer banking should be a relatively low profit operation. The DealBook article states that Citi is ending consumer banking operations in less affluent nations such as Mexico and concentrating on more profitable private banking operations for the affluent in America. Citi’s operations in Mexico are primarily for less affluent customers. The DealBook article also states that Citi is moving away from commercial and consumer lending because of their relatively low profitability in favor of investment banking. All of this indicates that Citi’s Mexican lending operation cannot “mint money” because it is involved in a highly profitable form of lending. A lender can, however, “mint money” through predatory lending if it can convince consumers to overpay substantially to borrow money from Citi.
Whether Citi’s Mexican lending reports that it “mints money” due to fraud, making extremely risky loans, possessing exceptional monopoly power, or predatory lending (or some combination) the reported ability to “mint money” should have immediately put Citi’s top leaders on notice that they had an enormous problem. It is nothing short of amazing after the experience of the financial crisis that DealBook journalists, the purported experts on finance, still ignore the most useful lesson they should have learned from that crisis. They still ignore the fact that exceptional reported banking profits are the most valuable warning signal because they are typically “too good to be true.” DealBook thinks that a bank operation that “mints money” must be a great bank. Under that theory we know a bunch of great banks – Fannie, Freddie, AIG, WaMu, Countrywide, Bear Stearns, Merrill Lynch, Lehman, and the big Irish and Icelandic banks, as well as Northern Rock – and Citi.
Conclusion
Citi does, eventually, close down the specific fraudulent operations in Mexico that it detects – many years after those frauds begin. Citi also calls those fraudulent operations “rogue” operations. That means that Citi does not have to remove Medina-Mora from control and bring in a leader of Banamex that would actually prevent its recurrent, lengthy, and massive fraudulent operations that “mint money.” Citi and Medina-Mora get plausible deniability. The question is how many massive frauds do Citi and Medina-Mora get to label “rogue” operations before even DealBook refuses to swallow the excuse?
COMMENT FROM readerOfTeaLeaves October 16, 2014 at 8:37 pm
Mirabile dictu!
Citi and Sorkin/Dealbook make a solid case for banking as a public utility!
Citi is wailing because they can’t make money lending to small businesses and ‘normal’ customers. Tsk, tsk!
IOW, the TBTF banks are (inadvertently) admitting that the current TBTF banking system simply can’t generate the profits required by large, financialized institutions. They may not be aware that’s what they’re admitting, but they’ve just handed the evidence to Sorkin. Pity he didn’t recognize they were handing him their asses on a corroded, rusty platter.
If the TBTF banking model can’t meet the needs of the bulk of the population – because it doesn’t generate large enough profits – then we need to think about how to provide banking services for everyone in a way that doesn’t have to ‘deliver profits’ – or ‘mint money’.
The utility model of banking would fit that need perfectly.
I doubt that Citi realized that in whining to Sorkin, what they’re actually doing is making a very solid, public case for some new model of banking as a utility.
The irony
Mirabile dictu!
Citi and Sorkin/Dealbook make a solid case for banking as a public utility!
Citi is wailing because they can’t make money lending to small businesses and ‘normal’ customers. Tsk, tsk!
IOW, the TBTF banks are (inadvertently) admitting that the current TBTF banking system simply can’t generate the profits required by large, financialized institutions. They may not be aware that’s what they’re admitting, but they’ve just handed the evidence to Sorkin. Pity he didn’t recognize they were handing him their asses on a corroded, rusty platter.
If the TBTF banking model can’t meet the needs of the bulk of the population – because it doesn’t generate large enough profits – then we need to think about how to provide banking services for everyone in a way that doesn’t have to ‘deliver profits’ – or ‘mint money’.
The utility model of banking would fit that need perfectly.
I doubt that Citi realized that in whining to Sorkin, what they’re actually doing is making a very solid, public case for some new model of banking as a utility.
The irony
http://www.businessinsider.com/us-stock-selloff-v-japan-2014-10
The Nikkei closed down another 1.40% on Thursday night. It's currently the biggest underperformer of the year, beating the main equities index of every other advanced economy.
As of Thursday, the S&P 500 was still in the green for the year, up 2.4% since January. In comparison, Japanese equities were getting smoked, down 9.48% since January, and down 11% in the past three weeks alone.
In terms of the Japanese economy, an April sales-tax hike had a significant impact, and Friday the Financial Times reports that Bank of Japan failed to meet its bond-buying target for the first time in two years, despite a massive quantitative easing program.
As the chart makes clear, Japanese equities are struggling to get any real traction at all this year.
Only Germany's DAX, down more than 8% since January, comes close in terms of the world's major advanced economies.
It's not all bad news for Japan's investors. Despite a miserable performance this year, stocks are still riding high in comparison with, say, their 2012 levels. That's because the Nikkei surged by an astonishing 57% in 2013. To put the recent drop in context, here's a longer-term graph:
Read more: http://www.businessinsider.com/us-stock-selloff-v-japan-2014-10#ixzz3GOtE9K2S
The Nikkei closed down another 1.40% on Thursday night. It's currently the biggest underperformer of the year, beating the main equities index of every other advanced economy.
As of Thursday, the S&P 500 was still in the green for the year, up 2.4% since January. In comparison, Japanese equities were getting smoked, down 9.48% since January, and down 11% in the past three weeks alone.
In terms of the Japanese economy, an April sales-tax hike had a significant impact, and Friday the Financial Times reports that Bank of Japan failed to meet its bond-buying target for the first time in two years, despite a massive quantitative easing program.
As the chart makes clear, Japanese equities are struggling to get any real traction at all this year.
Only Germany's DAX, down more than 8% since January, comes close in terms of the world's major advanced economies.
It's not all bad news for Japan's investors. Despite a miserable performance this year, stocks are still riding high in comparison with, say, their 2012 levels. That's because the Nikkei surged by an astonishing 57% in 2013. To put the recent drop in context, here's a longer-term graph:
Read more: http://www.businessinsider.com/us-stock-selloff-v-japan-2014-10#ixzz3GOtE9K2S
