Jim Sinclair’s Commentary
Who paid the bonuses for Wall Street and how it worked:
1. FASB capitulates and allows holders of OTC derivatives to value them at whatever they wish.
2. International investment firms begin strong mark up policies towards their crap inventory.
3. Profits from the mark up of crap OTC derivatives by the international investment firms is recognized as trading income.
4. Tarp money comes into the firms and goes out as bonuses to the management, trading department and general employees at obscene levels.
5. Stock and bond issues are made to pay back tarp funds.
6. Therefore the money bonuses out by the international investment firms were TARP funds, not real earnings, but false FASB permitted mark up paper earnings through the trading department and declared as trading income.
7. The TARP money was paid back through the issue of stocks and bonds to the public, therefore the public paid the TARP back, not the financial institutions.
8. The obscene level of bonuses is because this game of convert false paper profit into cash into the bank account of the banksters and their merry crew is now game over. It was the last dip at the well of public funds laundered via TARP of the caved in FASB.
9. In the final analysis the public paid those obscene bonuses that were in truth, unearned.
Jim Sinclair’s Commentary
The writer makes a solid point.
Jim Sinclair’s Commentary
The following is scary for the equity bulls.
Jim Sinclair’s Commentary
We will see. I am hard pressed to believe that all of a sudden Wall Street no longer owns Washington. It sure has in the past.
Delay will be the best tactic that Goldman can use. It will take considerable time to adjudicate this civil suit.
Goldman Sachs: At war with Washington
The US government’s court battle with Goldman Sachs is an essential first step on the road to banking reform
Saturday 17 April 2010
One tweet yesterday said it all: "How can the [US] government sue Goldman Sachs? I thought Goldman Sachs ran the government." That charge is just a tad harder to make today, now that the biggest investment bank on Wall Street is fighting a civil suit for fraud filed by a government watchdog. For anyone who wants a reckoning for the economy-devastating episode that is the banking crisis, this bears the promising indications of war between Wall Street and Washington.
Even more satisfying, this case goes straight to the heart of the financial crisis: it is about the dodgy sub-prime mortgage vehicles that drove all the market madness. According to the Securities and Exchange Commission, Goldman Sachs created a package of dodgy home loans and flogged it to investors – without disclosing that one of its hedge-fund clients had picked the loans that went into the package, and had bet that the investments would fall in value. What this amounts to is an allegation that Goldman knocked up a stinky investment that it knew would tank and scammed investors into buying it. Goldman Sachs made money, the hedge-fund billionaire John Paulson made money – and the suckers lost more than £650m. If any British taxpayer wants to know who these suckers were, look in a mirror: our own RBS was the ultimate insurer for the deal and had to pick up the tab.
Goldman calls the allegations "unfounded in law and fact". But without wishing to get into what is set to be a big, bloody battle, it is possible to make three observations. First, Goldman Sachs is going to have a hard time warding off the damage to its reputation done by this case. For a taster, look at page 7 of yesterday’s SEC filing, which quotes an email from Fabrice Tourre, the executive who helped make and sell this investment: "The whole building is about to collapse anytime now … Only potential survivor, the fabulous Fab[rice Tourre] … standing in the middle of all these … exotic trades he created without necessarily understanding all of the implications of those monstruosities!!! [sic]" Coming from a bank that bangs on about its good name and fair dealing, this stinks.
Second, this case marks a distinct turn in Washington’s approach to Wall Street – and about time too. With the healthcare battle settled, Barack Obama is again talking about reforming the banks. Let us hope that his bark is accompanied by a decent bite. Finally, months before any regulatory action, this story was reported in detail by the New York Times. Whatever happens in the case, its very existence is testimony to the role that good journalism can play in uncovering difficult and complex stories that affect us all.
Jim Sinclair’s Commentary
This entire thing is coming within weeks of an unwind that no amount of bailout money is going to reverse.
April showers in the Gold market make for May flowers.
Foreclosure Rates Surge, Biggest Increase In 5 Years
BY Stephanie Sklar
A record number of US homes were foreclosed on in the first three months of 2010, an indication that banks are beginning to wade through the backlog of troubled home loans at a faster rate, The Associated Press has reported.
On Thursday, RealtyTrac Inc. said that the number of US homes taken over by banks went up 35% in the first quarter from 2009. Moreover, households facing foreclosure increased 16% in the same period and 7% from the last three months of last year.
More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter dating back to at least January of 2005, when RealtyTrac started reporting the data.
“We’re, right now, on pace to see more than 1 million bank repossessions this year,” said RealtyTrac’s Senior Vice President Rick Sharga.
Foreclosures started to drop in 2009 when banks were pressured by the Obama administration to modify home loans for troubled borrowers. Moreover, some states enacted foreclosure moratoriums to give homeowners, who were behind in their payments, time to catch up. And, in a lot of instances, banks have had problems in coping with how to handle the glut of troubled loans.
Jim Sinclair’s Commentary
Thanks to CIGA Green Hornet for this article.
I am presently in Doha, Qatar making my way back to Connecticut.
If you really want to know how horrible the banksters are, take a read here.
A Wall Street Invention Let the Crisis Mutate
By JOE NOCERA
Published: April 16, 2010
Every time you pick up another rock along the winding path that led to the financial crisis, something else crawls out. Subprime mortgages were sold as a way to give low-income people a chance at homeownership and the American Dream. Instead, the mortgages turned out to be an excuse for predatory lending and fraud, enriching the lenders and Wall Street at the expense of subprime borrowers, many of whom ended up in foreclosure.
The ratings agencies, which rated the complex investments that were built with subprime mortgages, turned out to be only too happy to be gamed by firms that paid their fees — slapping AAA ratings on mortgage bonds doomed to fail. Lehman Brothers turned out to be disguising the full reality of its horrid balance sheet by playing accounting games. All over Wall Street, firms pushed mortgage originators to churn out more loans that were doomed the moment they were made.
In the immediate aftermath, the conventional wisdom was that Wall Street had simply lost its head. It was terrible, to be sure, but on some level understandable: Dutch tulips, the South Sea bubble, that sort of thing.
In recent months, though, something more troubling has begun to emerge. In December, Gretchen Morgenson and Louise Story of The New York Times exposed the role that some firms, including Goldman Sachs and Deutsche Bank, played in putting together investment structures — synthetic C.D.O.’s, they were called — that were primed to blow up. They did so, reportedly, because some savvy investors wanted to go short the subprime market.
Jim Sinclair’s Commentary
Nothing, not even news articles, happen in China for no reason at all.
China should use more reserves to buy gold-researcher
Sat Apr 17, 2010 12:54am EDT
BEIJING, April 17 (Reuters) – China should use more of its massive foreign exchange reserves to buy gold to support its aim of raising the international role of the yuan currency, a senior government researcher said on Saturday.
Li Lianzhong, who heads the economic department of the Communist Party’s policy research office, said that Beijing should also encourage domestic enterprises to acquire foreign energy and natural resource assets by using part of the foreign exchange reserves.
"We can also consider buying some more gold because if we want to develop the RMB into an international currency, we must have some scale of gold reserves," Li told a forum in Beijing. The yuan is also known as the renminbi.
China’s foreign exchange reserves, the world’s largest, rose to $2.4471 trillion by the end of March.
China disclosed last April that its official gold holdings had risen to 1,054 tonnes from 600 tonnes in 2003, confirming years of speculation it had been buying. [ID:nPEK307477]
But gold is still a small portion of its huge foreign exchange reserves, which are mostly invested in dollar-denominated assets.