Jim Sinclair’s Commentary
It has to be the Mini Ice Age.
Jim Sinclair’s Commentary
Only if they are lucky and the books are cooked.
CBO: this year’s budget deficit to hit $1.5T
Washington (AP) — A new estimate predicts the federal budget deficit will hit almost $1.5 trillion this year, a stunning new record.
The latest figures from the Congressional Budget Office are up from previous estimates because Congress and President Barack Obama teamed up in December on bipartisan legislation to extend Bush-era tax cuts that were due to expire. The new estimates will only add fuel to a raging debate over cutting spending and looming legislation that’s required to allow the government to borrow more money.
The nonpartisan budget agency predicts the deficit will drop to $1.1 trillion next year.
Legislation passed in December to extend tax cuts, unemployment benefits for the long-term jobless and provide a 2 percent payroll tax cut this year adds almost $400 billion to this year’s deficit.
Jim Sinclair’s Commentary
More significant snow is predicted for this evening under a winter storm warning.
Snow is expected to continue until Saturday.
Jim Sinclair’s Commentary
The real question is who is going to take over New York? The headline should read "Nassau County Broke," but that would violate the rules of MOPE.
This says no problem, New York has taken them over a slightly troubled Nassau County.
Sell Gold anything? Hell No!
New York State Takes Control of Nassau’s Finances
By DAVID M. HALBFINGER
Published: January 26, 2011
UNIONDALE, N.Y. — A state oversight board has seized control of Nassau County’s finances, saying the wealthy and heavily taxed county had nonetheless failed to balance its $2.6 billion budget despite months of increasingly ominous warnings.
The 6-0 vote here on Wednesday afternoon by the Nassau County Interim Finance Authority gives it veto power over the county’s budget, labor contracts, borrowings and other major financial commitments.
The board cited a deficit that reached nearly $350 million at one point last year but that was not fully closed, it said, despite assurances to the contrary by the county executive, Edward P. Mangano, a Republican.
It was only the second time a county had been taken over by New York State. The first was Erie County, the state’s 24th wealthiest county, where the median household income is half that of Nassau’s, New York’s richest county. The control period in Erie ended in 2009.
The move effectively puts the finance authority board, a six-man panel of state-appointed financial experts and other professionals, at the bargaining table opposite Nassau’s civil servants, police officers and other labor unions.
Jim Sinclair’s Commentary
This is a dark hole that few people have looked into. Sell your gold anything? Hell No!
Bondholders Left in the Dark
Concern Grows Over Lack of Financial Disclosure by State, Local Governments
By IANTHE JEANNE DUGAN
Investors and regulators are growing increasingly concerned about the quality and timeliness of information that state and local governments are disclosing about their finances.
The Securities and Exchange Commission is inquiring about public statements Illinois made about its pension funds amid the agency’s increased scrutiny of the municipal-bond market, a representative for the governor said.
Amid governments’ financial woes, meanwhile, angry investors are finding themselves blindsided by bad news. Those concerns are reflected in a forthcoming study that shows that public issuers routinely file information about their financial health well beyond the date they promise to bondholders, if at all.
This weak disclosure is raising anxiety in the $2.9 trillion market, where investors withdrew more than $20 billion from municipal bond funds in recent weeks.
Federal regulators’ power in this realm is limited because municipal borrowers are unregulated. But they are trying to crack down on the disclosure issue.
Jim Sinclair’s Commentary
I believe you were informed a long time ago about each of these manoeuvres used to make billions in OTC derivatives.
Notice how all the officers and board of director members have been hiding now for years? Their silence is deafening.
E-mails Suggest Bear Stearns Cheated Clients Out of Billions
Jan 25 2011, 1:01 AM ET By Teri Buhl
Lawsuit alleges the bank took extreme measures to defraud investors, and now JPMorgan may be on the hook
Former Bear Stearns mortgage executives who now run mortgage divisions of Goldman Sachs, Bank of America, and Ally Financial have been accused of cheating and defrauding investors through the mortgage securities they created and sold while at Bear. According to e-mails and internal audits, JPMorgan had known about this fraud since the spring of 2008, but hid it from the public eye through legal maneuvering. Last week a lawsuit filed in 2008 by mortgage insurer Ambac Assurance Corp against Bear Stearns and JPMorgan was unsealed. The lawsuit’s supporting e-mails, going back as far as 2005, highlight Bear traders telling their superiors they were selling investors like Ambac a "sack of shit."
News of internal whistleblowers coming forward from Bear’s mortgage servicing division, EMC, was first reported by The Atlantic in May of last year. Ex-EMC analysts admitted they were sometimes told to falsify loan-level performance data provided to the ratings agencies who blessed Bear’s billion-dollar deals. But according to depositions and documents in the Ambac lawsuit, Bear’s misdeeds went even deeper. They say senior traders under Tom Marano, who was a Senior Managing Director and Global Head of Mortgages for Bear and is now CEO of Ally’s mortgage operations, were pocketing cash that should have gone to securities holders after Bear had already sold them bonds and moved the loans off its books.
Mike Nierenberg, who ran the adjustable-rate mortgage trading desk at Bear and is now the head of mortgages and securitization for Bank of America, was a key player ensuring the defaulting loans Bear was buying would move off their books right after they bought them, with little concern for the firm’s due diligence standards. He was joined in this scheme by Jeff Verschleiser, his peer and Senior Managing Director on the mortgage and asset-backed securities trading desk and head of whole loan trading. He is now an executive in Goldman Sachs’ mortgage division.
According to the lawsuit, the Bear traders would sell toxic mortgage securities to investors and then sell back the bad loans with early payment defaults to the banks that originated them at a discount. The traders would pocket the refund, and would not pass it on to the mortgage trust, which was where it should have gone to be distributed to the investors who owned the bonds. The Marano-led traders also cut the time allowed for early payment defaults, without telling the bond investors. That way, Bear could quickly securitize defective loans, without leaving enough time for investors to do their own due diligence after the bonds were sold and put-back any bad loans to Bear.
Jim Sinclair’s Commentary
What OTC derivatives do not do to the international banking houses, litigation will.
Now it is getting so common that it may not go to settlement. BofA simply cannot settle this one.
BofA’s Countrywide sued for ‘massive fraud’
Mortgage backed securities bought by institutional investors now at junk status
By Jonathan Stempel
updated 1/25/2011 6:54:05
NEW YORK — Bank of America Corp’s Countrywide mortgage unit has been sued by investors claiming they were victimized in a "massive fraud" when they bought mortgage-backed securities.
The lawsuit was filed on Monday in a New York state court by 12 plaintiffs including the TIAA-CREF fund family, New York Life Insurance Co and Dexia Holdings Inc.
According to the complaint, the investors bought hundreds of millions of dollars of Countrywide securities from 2005 to 2007 that they thought were "conservative, low-risk investments."
The investors said Countrywide misrepresented the securities’ safety in offering documents and elsewhere, and compromised their investments by ignoring its underwriting guidelines.
As a result, the complaint said, most of the securities now carry "junk" credit ratings rather than the "triple-A" ratings they once had, resulting in "significant losses."
Jim Sinclair’s Commentary
This is very sad. The fraud moves on. The can is being kicked down a dead end road.
All the paper and spit laid on the broken backs of Western financial entities must dissolve into a bust in confidence, resulting in a dollar lower than anyone anticipated.
FASB Backs Off Fair-Value of Loans Proposal After Opposition
By Michael J. Moore – Jan 25, 2011 5:13 PM ET
The Financial Accounting Standards Board backed off from its plan to make banks use market values to calculate how much the loans on their books are worth.
The panel, which sets U.S. accounting standards, today approved a change to its proposal that will allow banks to report some financial instruments on their balance sheets at amortized cost, as they currently do, rather than at fair value. The biggest U.S. banks and the American Bankers Association had opposed the original plan.
FASB’s planned rule would have forced lenders to mark deposits and loans to market values as they already do for traded securities. Not all changes in the values of assets and liabilities would affect net income, since some fair-value adjustments can be recorded in what’s called “other comprehensive income,” a balance-sheet item added or deducted from equity.
“The vote today is a reflection of our due process at work and how important input from our constituents is in decision making,” said Neal E. McGarity, a spokesman for Norwalk, Connecticut-based FASB.
The original proposal, which prompted 2,814 comment letters to FASB since its May release, was opposed by lenders including Wells Fargo & Co. and Regions Financial Corp. and former Federal Deposit Insurance Corp. Chairman William Isaac, now chairman of Cincinnati-based Fifth Third Bancorp, Ohio’s largest lender.
