vlogolution network

Stocks Declaring First-Time Dividends Strongly Outperform Market

Alexander P Morris — Wed, 01 Feb 2012 17:53:47 +0000

(DynamicDividend) “If the data I’ve collected over the last six months is any indication, a very strong case can be made for the initiation of a dividend as a signal that a stock is about to generate market-beating returns.”

“Of the 36 stocks listed, only three are currently trading lower than their final closing price prior to declaring their first payout, and only seven have been outperformed by the S&P 500 since the same announcement. The average gain by the new dividend stocks (22.75%) is an absurd 15.67% better than the average gain by the S&P 500 (7.09%) during comparable periods.”

“Some highlights include: SMF Energy gaining 182% (vs. 17% for the S&P 500), Ebix gaining 58% (vs. 12%), Intuit gaining 40% (vs. 14%), Xyratex gaining 68% (vs. 2%), and Emcor Group gaining 53% (vs. 16%). Solutia has popped 77%, thanks in large part to Eastman agreeing to pay a 42% premium for the company last week.”

Full Story: New Dividend Stocks Absolutely Crushing Broader Market (DynamicDividend)

DynamicDividend.com is a terrific source of all types of dividend-related news and information, including lists of “Dividend Dynamo” stocks that have had the longest run of annual consecutive dividend growth.

Stocks from List: NRGM, RRMS, ZMH, A, ESIO, CSPI, FMCN, GNE, KNSY, SOA, FBNK, GFF, IACI, NOR, LXK, PCTI, OILT, CORE, ACFN, HSNI, EME, HL, PRA, EBIX, WWAY, NICK, CECE, INTU, CGI, NMFC, KINS, DSW, FUEL, AMOT, JCOM, XRTX

(read more...)

Where do Billionaires Park Their Cash and Assets?

Alexander P Morris — Sat, 21 Jan 2012 04:53:37 +0000

(BloombergMarketsMagazine) “Cash generates minuscule returns. Commodities, especially gold, can soar or tumble in an instant. In these perplexing times, Bloomberg Markets magazine in its January issue asked 10 billionaires 14 questions covering their views on the global economy, where they see opportunities and who gave them the best advice.”

Some highlights:

John Paul DeJoria (Primary Assets: Stakes in John Paul Mitchell Systems and Patron Spirits Co. Residence: Los Angeles Industry: Retail):

“Influential indicators? Beauty salons. Typically, customers will visit every six weeks; in downturns, that drops to every eight weeks. When the frequency starts to go up again, it indicates the economy is improving.”

“Where to park $1 million in cash? Twenty-five percent in gold, 25 percent in silver, 25 percent in NYSE blue-chip stocks that pay a dividend and 25 percent between Asian and European blue chips that pay a dividend.”

Eli Broad (Primary Assets: Investments, art Residence: Los Angeles Industries: Banking, real estate):

“Influential indicators? Consumer confidence, unemployment and political gridlock.”

“Best investing advice? Don’t bet the farm.”

“Margin in portfolio? Not in this uncertain world.”

“Where to park $1 million in cash? High-quality multinational consumer companies such as Procter & Gamble Co., Coca-Cola Co., Kraft Foods Inc. and Johnson & Johnson. (JNJ)”

Peter Hargreaves (Primary Asset: 32.2 percent of Hargreaves Lansdown Plc, the U.K.’s biggest retail broker Residence: Bristol, England Industry: Financial services):

“Fixed-income investments? German bonds for the currency play when the euro implodes”

Where to put $1 million in cash? $500,000 in Singapore dollars and $500,000 in Norwegian krone.”

“Is there a money manager you would trust with your entire portfolio? Me.”

Full Story: Billionaire Prokhorov Touts Gold as Trump Embraces Foreclosures (BloombergMarketsMagazine)

BEWARE Malicious eventvwr SCAM from Indian Call Center

admin — Thu, 05 Jan 2012 23:15:55 +0000

Apparently, this is a scam that’s been going around for a couple of years now, and can be especially dangerous for unsuspecting, less computer-savvy target victims. While many of the scam reports I’ve come across seem to have targeted England and Australia, it would appear that the scammers are now targeting more Americans as well. Today, we received one such call. The scam goes as follows:

You get a call from some Indian guy with a generic name such as “Adam Smith” who explains to you in horribly broken English that he’s a registered Microsoft technician and has received a call alerting him that your IP address is the source for serious attacks on their servers due to multiple computer virus infections on your end. If you ask for any information on the source or target IP addresses involved, the person will attempt to deflect the question, and inform you that he/she is unauthorized to provide you that information!

They will proceed to try convincing you that your computer is full of viruses (based on some standard status and error messages automatically generated by your computer), and they try to get you to grant them complete access to your entire computer (passwords, credit cards, everything) via the free “Ammyy Admin” remote desktop control software. If you don’t agree to buy their crappy, useless, and thieving “support services”, they’ll use the computer access you openly granted them to screw up your computer and randomly delete stuff (watch them erasing things off the desktop in this video).

‘Nuff said… BE WARNED, ALWAYS BE WARY, and never fall for some schmuck on the phone trying to con information out of you, or get you to run any type of software on your PC.

Watch the video to see exactly how this scam plays out.

Militarization of American Police – Citizens are considered little more than scurrying cockroaches and savage animals

Alexander Paul Morris — Thu, 08 Dec 2011 16:41:41 +0000

Perhaps the most frightening part of this 2006 video is that not one of these police officers objected to shooting rubber bullets at an unarmed woman’s head and laughing about it. Or if any of them did, they certainly did not feel comfortable enough to go against the majority of their fellow officers and make a point of it… And, just like my recent 2011 pre-Thanksgiving Day parade incident, I’m experiencing, hearing, and seeing more stories than ever of such treatment that don’t even involve protests or rallies (and that doesn’t even consider all the frightening TSA-abuse stories – against children no less!). It’s more about control and demoralizing compliance.

When an army goes to war, the command generally always comes up with some derogatory term to address the enemy, as it’s much easier to rape, demean, and/or kill people when you’re referring to them as “Gooks” or “Cockroaches”.

“In Rwanda they referred to Tutsis as cockroaches,” explains Omaar. “They were not human beings. This is very important to understand, very close parallels to what happened in Hitler’s Germany. ‘Don’t worry, you’re not killing humans like you. You are killing some vermin that belongs under your shoe. You’re killing cockroaches.‘ – The Few Who Stayed – Defying Genocide in Rwanda (AmericanRadioWorks)

(NYTimes) “They called people ‘animals’ and ‘savages.’ One comment said, ‘Drop a bomb and wipe them all out.‘ .. Hearing New York police officers speak publicly but candidly about one another and the people they police is rare indeed, especially with their names attached. But for a few days in September, a raw and rude conversation among officers was on Facebook for the world to see — until it vanished for unknown reasons.” – N.Y.C. Police Maligned Paradegoers on Facebook (NYTimes)

(WashingtonsBlog) “Journalists from across the spectrum have documented the militarization of police forces in the United States, including, CNN, Huffington Post, the Cato Institute, Forbes, the New York Times, Daily Kos, Esquire, The Atlantic, Salon and many others. Many police departments laugh at and harass Americans who exercise their right to free speech. Indeed – especially since police brutality against protesters has been so blatant in recent months, while no top bank executives have been prosecuted – many Americans believe that the police are protecting the bankers whose fraud brought down the economy instead of the American people.”

“Most assume that the militarization of police started after 9/11. Certainly, Dick Cheney initiated Continuity of Government Plans on September 11th that ended America’s constitutional form of government (at least for some undetermined period of time.) On that same day, a national state of emergency was declared … and that state of emergency has continuously been in effect up to today. But the militarization of police actually started long before 9/11… in the 1980s.”

“SWAT teams were originally designed to be used in violent, emergency situations like hostage takings, acts of terrorism, or bank robberies. From the late 1960s to the early 1980s, that’s primarily how they were used, and they performed marvelously. .. But beginning in the early 1980s, they’ve been increasingly used for routine warrant service in drug cases and other nonviolent crimes. And thanks to the Pentagon transfer programs, there are now a lot more of them.”

“After 9/11 the government drew up the Patriot Act within 20 days and it was passed. The Patriot Act is huge and I remember someone asking a Justice Department official how did they write such a large statute so quickly, and of course the answer was that it has been sitting in the drawers of the Justice Department for the last 20 years waiting for the event where they would pull it out.”

“The militarization of police forces throughout the United States cannot be taken in a vacuum, but is part of the ongoing drift towards a police state. The government has said for years that American citizens on U.S. soil may be targets in the war on terror, and is using anti-terrorism laws to crush dissent.

Indeed, you can be labeled as or suspected of being a terrorist simply for questioning war, protesting anything, asking questions about pollution or about Wall Street shenanigans, supporting Ron Paul, being a libertarian, holding gold, or stocking up on more than 7 days of food. Government agencies such as FEMA are allegedly teaching that the Founding Fathers should be considered terrorists. So perhaps that means that any people who like American values are ‘terrorist sympathizers’. ”

Full Story: The Militarization of American Police – and Shredding of Our Constitutional Rights – Started At Least 30 Years Ago (WashingtonsBlog)

(WashingtonsBlog) “Obama Wants to Veto the Indefinite Detention Bill Because It Would Hold the U.S. to the Geneva Convention” – The Real Reason for Obama’s Threat to Veto the Indefinite Detention Bill (Hint: It’s Not to Protect Liberty)

$LULU – can you bottom-fish a high-growth “expectations miss”?

Alexander Paul Morris — Mon, 05 Dec 2011 18:21:43 +0000

(TheReformedBroker) “Sometimes when stocks gap down on earnings they don’t bounce – they keep going and going lower, never to be heard from again. But I knew $LULU would at least bounce, even if it eventually retests the lows from this morning where I bought in (41.75 to 42.25). This is because LULU didn’t miss earnings or revenue or guide lower for the coming quarter – it simply didn’t blow The Street away by the same magnitude that it had in prior quarters. It still grew faster than most other public retailers and it still has more room to grow than any retailer I can think of.”

“Only an imbecile looks at +30% revenue growth as a ‘disappointment’ – especially amidst a market full of other stocks that couldn’t grow their top line revenues if their lives depended on it. And the fact that LULU may not have met sell-side analyst expectations means absolutely nothing to me. Because I’ve seen this short-term myopia before back when Coach ($COH) was a young, mid cap growth story during the last recession (2002 – 2003). It would blast the Street’s stupid expectations out to Jupiter three quarters in a row and then have a quarter that was just okay. People couldn’t wait to write it off and say it was “decelerating” or had peaked. And then it would smash the numbers for another three or four quarters in a row just to piss the naysayers off.”

“Short-termism is foolish when you’re talking hyper-growth potential and a young company with nothing but room to expand. I’m not telling you LULU is cheap or ‘deserves’ a 30 multiple or blah blah blah. I’m saying that stocks don’t get punished for growing revenues at a 30% clip for long. I knew they’d bring it back simply for the fact that, well, there just aren’t any other LULUs to buy, plain and simple.”

Full Story: lululesson (TheReformedBroker)

DEA Shuts Down 88 Year Old Man’s Water Purification Business as Drug Paraphernalia

Alexander P Morris — Mon, 28 Nov 2011 20:04:10 +0000

(SacBee) “Eighty-eight-year-old retired metallurgist Bob Wallace is a self-described tinkerer, but he hardly thinks of himself as the Thomas Edison of the illegal drug world. He has nothing to hide. His product is packaged by hand in a cluttered Saratoga garage. It’s stored in a garden shed in the backyard. The whole operation is guarded by an aged, congenial dog named Buddy.”

“But federal and state drug enforcement agents are coming down hard on Wallace’s humble homemade solution he concocted to help backpackers purify water. Wallace says federal and state agents have effectively put him out of business, because authorities won’t clear the way for him to buy or sell the iodine he needs for his purification bottles. Rejected for a state permit by the Department of Justice, he is scheduled to appeal his case before an administrative judge in Sacramento next month.”

“Meanwhile, the exasperated Stanford-educated engineer and his 85-year-old girlfriend said the government – in its zeal to clamp down on meth labs – has instead stopped hikers, flood victims and others from protecting themselves against getting a really bad case of the runs.”

“.. But about four years ago, the DEA began to look closely into the product, even citing it in a position paper, and suggesting that it was being used by cranksters as well as campers. And in 2007, federal regulations were passed strictly regulating the chemical. Wallace said the new rules mandated that he had to pay a $1,200 regulatory fee, get federal and state permits, keep track of exactly who was buying his product and report anybody suspicious .”

“Wallace ignored the fee. And if they wanted a list of his customers, he fumed, all they would get would be camping equipment store managers and wholesalers.”

“In May, his Oklahoma distributor – warned by the DEA – said he could no longer send Wallace iodine. .. For Wallace to comply, the state Department of Justice fingerprinted the couple and told Wallace he needed to show them such things as a solid security system for his product . Wallace sent a photograph of Buddy sitting on the front porch. ‘These guys don’t go for my humor,’ Wallace said. ‘Cops are the most humorless knotheads on the planet.’ ”

Full Story: Federal agents say 88-year-old man’s invention is being used by meth labs (SacBee)

Now granted, I understand that methamphetamines are terribly destructive (though ironically they were once legal and openly provided to soldiers by the military to help them “keep on going”). But how does imposing such outrageous regulatory restrictions on a small business (with products built in the back of someone’s garage) that sought only to help people have greater access to cheap, safe and clean drinking water, help anyone? I also understand that Brita and others may do quite a bit of lobbying (especially in California), so there’s also the possibility that some companies didn’t appreciate competition from an inexpensive self-purifying water bottle without consumables and sought to have action taken against it. And while here’s another small business destroyed, I’m sure meth labs have already secured an alternative source of iodine to continue creating their wares. Not sure how hard it would be to extract iodine from everyday table salt, but hopefully that’s not the DEA’s next target… And maybe the government can start going after some of the real thieving crooks out there like Jon Corzine and other members of the criminal banking elite who have probably turned more people towards drugs in the past few years alone than did all of Vietnam and Woodstock.

Macy’s Day Parade and Fascist New York City – Nearly Arrested on my Own Block

Alexander Paul Morris — Thu, 24 Nov 2011 00:34:51 +0000

Tonight Michelle and I had our own #OccupyWallStreet experience merely trying to get back home on 81st Street through the Thanksgiving Day parade mess. Exiting Central Park from 81st Street, we patiently waited for the light to change. We noticed at least twenty people allowed to enter the 81st Street corner BY COPS (right across from us). As the light changed, we began crossing the street dragging our small suitcase, some groceries, and several other bags. We were merely trying to get back home. Next thing a huge cop twice my size storms toward me telling me I have to go to 82nd street. I told him we live on 81st Street, not 82nd, and pointed to all the other people that were being allowed through. He got right up into my face with a horribly loud and frightening demeanor, said he couldn’t care less and we have to go to 82nd street. I asked if they’ll let me onto 81st street from there? Apparently, that wasn’t his concern, and he threatened me with arrest and a miserable Thanksgiving if we didn’t leave the area, and in a flash we were surrounded by FIVE cops forcing us back, threatening me with arrest, and nearly pushing me over. It felt like I had just insulted a drunken frat boy and was about to get pounded by his brethren. Michelle was convinced that had she not been standing next to me I probably would have been leg-swept, face-planted into the ground, and thrown in jail. This is not the first time I’ve been threatened here on this special pre-”Thankgiving Parade” day. A few years back I was also threatened by a Napoleon-like cop for standing under our own building’s awning past 11pm. I wasn’t there more than 5 minutes.

This is not a risky or violent event or protest. This is about people trying to get back home, giving them some modicum degree of respect – and not treating civilized and law-abiding citizens like cattle needing to be prodded. But given just a few of the horrifying #OWS and #TSA stories we’ve heard, that’s perhaps highly wishful thinking in an America where our constitutional rights are considered little more than annoying guidelines.

Granted, there certainly are officers who are respectful of those they serve – and I am grateful for their courtesy. The lady officer who finally let us onto 81st Street, and listened to me angrily rant about what we had just been through was respectful and understanding, and even apologized for the behavior of her “less” civil ego-maniacal compatriots.

Nonetheless, it is quite shocking what life in America has now become. This was not some violent protest. This is a peaceful time, with some higher crowd activity with mostly families and children checking out the Macy’s day parade balloons being filled by the Museum of Natural History. Yet I am threatened with arrest just for trying to get home, while outright thieves such as Jon Corzine steal BILLIONS from MF Global clients free and clear – and banks continue to defraud customers and taxpayers on a daily basis. This cop wasn’t even asking me for ID to prove I lived there, and given his violent and aggressive demeanor from the start, he would have likely flattened me down on the spot had I tried reaching for my pocket.

I also wish I had caught the event on my iPod, but again.. I was afraid I’d have been shot just reaching for it. Michelle managed to pull out her iPhone while they seemed focused on me, but by then the worst of the event had already past, possibly since they now noticed her with iPhone in hand (along with a growing crowd of onlookers). I tried remembering some of the badge numbers, but as it was getting dark and I was in such shock, I couldn’t read them clearly as my whole body was shaking in dismay. And perhaps most sadly of all, with rogue cops getting away with shooting unarmed marines in the head I doubt it would matter anyway as this “incident” would seem trivial by comparison.

When we finally got into our building, another lady who heard our story told us of her own horror story with NYPD police on one of the many days when Obama comes to the city and everything gets blocked off or heavily restricted sometimes for dozens of blocks. She showed her ID – said she’s just trying to get home – and a cop threatened to shoot her in the back if she kept walking. She closed her eyes and just kept walking quickly into her building and hoped it was just a bluff. Again, she was just trying to get home. For all the #OWS talk of “public nuisance”, I guess it’s okay for us all to bow down to President Obama’s fund-raising visits as he blocks off 20 square blocks (and how much do those visits cost the city each time??). All hail to the privileged elite! And that ain’t me or John Stossel of 20/20 who lives in The Beresford on the same block.

And what a great start for a happy Thanksgiving, not…

UPDATE: Some “next-day” Thoughts after finally getting to sleep at 6am…

* This sounds like exactly what happened when #OWS members were funneled together and “forced” to move along “or else”, then arrested for blocking the Brooklyn Bridge.

* The cops made it especially difficult for me to capture any of their badge numbers, and especially the first aggressive cop’s badge number, since he stayed back while the others forced me back to the curb, at which point I couldn’t even see him anymore, and I was never offered an opportunity to safely obtain it (or any of the others).

* Why does it seem so many of the worst high-school bullies end up as police officers acting as government-sanctioned terrorists? Individuals of great character, honor and integrity who wish to “serve and protect” generally seem most interested in becoming firemen or marines – truly selfless defenders of the people. Those who enjoyed pulling wings off flies as children often seem to become cops, prosecutors, or prison guards. 1 Marine vs. 30 Cops at Occupy Wall Street – “There is no honor in this.” (YouTube)

* We were afraid to try leaving my own building after until the parade was over and the whole mess was gone lest we have to go through feeling violated by police a second time, possibly with a even worse outcome. We weren’t attending a protest or rally (not that we should feel afraid to do so – it is our constitutional right). We were AFRAID TO LEAVE OUR HOME.

* This incident was so disturbing, I didn’t manage to get to sleep until around 6am. I was happy and relieved the whole parade was gone and done with by the time I woke up. It’s frightening that this incident occurred over something so trivial as trying to get back into my own apartment building. There were no protests, there was no violence (beyond our scary selves, apparently), we were not violating any laws, nothing.

* Did these COPS perceive us as VIOLENT, a well-dressed couple weighed down by multiple bags and dragging a suitcase??? At the time, the area wasn’t even that crowded yet (it tends to hit its peak later in the evening). This incident occurred around 4:45pm.

* What if were carrying a child, or trying to return home from the park with my 3 year old niece? Could she have been hurt, or possibly emotionally scarred for life? I likely came off more aggressive as I sought to avert their “wrath” towards me and away from Michelle (how dare I). If there had been a child involved, I would likely have come off even more protective, which could have instigated an even worse outcome as I “DARED” confront, challenge, and “talk back to” an almighty roid-raging police officer.

* Why are so many upstanding and law-abiding citizens, us included, afraid of ever dealing with police officers, when they are supposed to serve, protect, and defend “we the people” who pay their salaries?

(NewYorker) “In a democracy, a mayor who believes he can shut down the press at will is not defending public safety; and a mayor who believes the police can be unleashed to manhandle the citizenry without answering for it cannot claim to be on the side of law or order.” – Occupy Wall Street Police Bloomberg – Who’s Police? (NewYorker)

(NYTimes) “A woman and her fiance were charged with trespassing and resisting arrest while closing her account in a protest against bank fees that was promoted by Occupy Wall Street; they say they were falsely arrested and subjected to excessive force.” – Protesters Arrested at Bank-Account Closing Sue City (NYTimes) HAD WE CAPTURED OUR EXPERIENCE, THE VIDEO IN THIS POST OF HOW THE POLICE TREATED THIS WOMAN TRYING TO CLOSE HER BANK ACCOUNT WOULD HAVE APPEARED NEARLY IDENTICAL (first video from 1:30 seconds in).

As a final note, I want to clarify that I know there are also many good cops out there who do put their lives on the line every day to honorably and courageously “serve and protect” in the best interest of the people. To those of you, I salute and applaud you for your service. However, the number of negative encounters I (and other friends and relatives) have had with police would make it difficult to write off as simply crossing an occasional “bad apple”.

MF Global Proves Sanctity of Segregated Funds is Just a Myth

Alexander P Morris — Fri, 18 Nov 2011 19:48:09 +0000

Interview with Trends Research founder Gerald Celente, who had his own six figure gold investment account completely looted by MF Global‘s chapter 11 trustees, and he is fighting to get it back. Also interesting is how certain higher-profile clients such as the Koch brothers and others clearly must have known of the cratering positions and imminent collapse of MF Global, as $$billions of dollars of accounts were “coincidentally” withdrawn just before the MF “house of cards” collapsed.

I don’t believe that people truly understand the ramifications of what has happened over at MF Global. People still seem to believe that clients who had money with MF were basically gamblers and “should have known better” by placing their money with “more secure” entities such as Interactive Brokers. That’s not to say Interactive Brokers is not secure (especially as they “seem” to practice extremely sound risk management). But what happens when one of their banks or counterparties also decides to “waive” their account holders’ rights? And what exactly would have given customers of MF any less reason to believe that MF Global would be any less secure, especially since the Federal Reserve granted them “Primary Dealer” status last year? Regulations are very strict on “segregated funds”. Those funds “should” actually be “SAFER” than a straight-up bank account (because the funds should generally be locked away at either the CME as margin or sitting in Treasury Bills so the banks can’t even lend that money out in REPO markets). If an Occupy Wall Street protester stole a sandwich, they’d probably be thrown in jail for 5 years. Jon Corzine recks New Jersey, and a year later, wrecks MF Global and steals HUNDREDS of MILLIONS from 150,000+ client accounts to cover more reckless gambling debts, and he’ll probably end up being the next secretary of the treasury. This guy should be hanged and held up to the standards of the Hammurabi Code (If a builder build a house for some one, and does not construct it properly, and the house which he built fall in and kill its owner, then that builder shall be put to death). If such a “code” were implemented, I’d bet such horrendous thefts and shenanigans would all but disappear. Instead, we have banks stealing $$BILLIONS from clients through cockamamie schemes, then paying $100 MILLION to the SEC without admitting or denying guilt while they pocket the rest, still leaving the clients/investors out most if not all of their losses. This is likely the tip of the iceberg, as there is no way to know how many other firms may have also made similarly reckless bets with client funds (or are unknowingly directly connected to others that do).

To help clarify what this really means, here is the “Safety of Funds” assertions by two reputable futures clearing firms:

(DormanTrading) “The funds in your account with Dorman are held as “Customer Segregated” funds. Our principal bank is Harris, NA, a subsidiary of BMO Financial Group of Toronto Canada. The segregated funds that Dorman holds at Harris, are primarily invested in US Treasury Bills, with the remainder in cash or deposited with the Chicago Mercantile Exchange as margin deposits. The Treasury Bills at Harris are specifically identified to Dorman and on Dorman’s books they are specifically identified to those accounts that have asked us to invest their funds.

The segregated account structure of your futures trading account protects you from suffering a loss, should your broker, your clearing firm, Dorman, or Harris file for bankruptcy. This segregated structure means that your funds on deposit are not subject to any offset, indebtedness, obligation, or the liabilities of any entity besides the customers themselves. These regulations are in place so that neither your clearing firm, Dorman, nor their bank Harris can dip into the customer segregated funds to offset losses elsewhere.” – Dorman Trading Safety of Funds

(RCG-Direct) “Pursuant to the Commodity Exchange Act and Commodity Futures Trading Commission (CFTC) regulations, Rosenthal Collins Group LLC (RCG), a Futures Commission Merchant (FCM), is required to treat all customers’ money, securities and other property received to margin, guarantee or secure futures or options on futures trades, as customer property. With regard to futures and options on futures accounts, RCG is required to account separately for and segregate customer money, securities and property and not to commingle those assets with RCG’s own operating assets. Customers’ segregated assets cannot be used to margin any other person’s trades. These segregation requirements apply to futures and options trades on exchanges located in the United States.” – Rosenthal Collins Group Customer Protection

Understanding Big Money, Banks, and the REPO Market…

(MartinArmstrong) “When you deal in REAL money, there is a problem. How do you store it? You can’t just put a billion on deposit at a bank. They will sell it every night and don’t have to tell you. If the REPO market blows up and you go to the bank and say I want my billion, they lost it, and so you turn to FDIC to collect your $100,000. Right! The ONLY way to park serious money is in treasuries.” – Will a Downgrade of USA FROM AAA Really Mean Anything? (MartinArmstrong)

(PeterBrandt) “According to the Commodity Exchange Act (the overarching law governing futures trading) customer funds at futures commission merchants ‘shall not be commingled with the funds of such commission merchant or be used to margin or guarantee the trades or contracts…of any customer or person other than the one for whom the same are held.’ CFTC Regulation 1.25 provides that:

‘No futures commission merchant and no clearing organization shall invest customer funds except in obligations of the United States, in general obligations of any State or of any political subdivision thereof, or in obligations fully guaranteed as to principal and interest by the United States. Such investments shall be made through an account or accounts used for the deposit of customer funds and proceeds from any sale of such obligations shall be re-deposited in such account or accounts.’ ” – MF Global: Proof that the U.S. government is not able or willing to protect investors (PeterBrandt)

The entire system has been utterly destroyed by the MF Global collapse

Alexander P Morris — Thu, 17 Nov 2011 23:00:13 +0000

(Barnhardt.biz) “I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.”

“I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. .. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.” – from Ann Barnhardt’s Client Letter (BCM HAS CEASED OPERATIONS), complete letter follows below…

(TheMarketTicker) “The reason they got caught is the same reason I would have gotten caught if I had been clearing through MF Global: Despite being around the markets since well before the 2000 crash and having successfully negotiated that and the 2008 mess everyone has believed, right up until MF blew up, that customer funds were in fact segregated and thus this risk would never occur. Simply put everyone has now discovered that this assumption is wrong. .. Nothing that has come out of the CME, the SEC or Washington DC that has restored my confidence that MF Global is, in fact, a one-off situation. In point of fact The Fed is now requiring margin on certain repo transactions where they never did before, implying that there may well be additional snakes in the grass and additional unrecognized and intentionally hidden risks of this sort.”

Full Story: Oh Oh. “Regulated” Derivative Markets About To Blow Up? (TheMarketTicker)

______________________________________________________________________

Entire Letter from Ann Barnhardt to her IBB / Commercial Hedging Clients (source: http://barnhardt.biz):

BCM HAS CEASED OPERATIONS

Posted by Ann Barnhardt – November 17, AD 2011 10:27 AM MST

Dear Clients, Industry Colleagues and Friends of Barnhardt Capital Management,

It is with regret and unflinching moral certainty that I announce that Barnhardt Capital Management has ceased operations. After six years of operating as an independent introducing brokerage, and eight years of employment as a broker before that, I found myself, this morning, for the first time since I was 20 years old, watching the futures and options markets open not as a participant, but as a mere spectator.

The reason for my decision to pull the plug was excruciatingly simple: I could no longer tell my clients that their monies and positions were safe in the futures and options markets – because they are not. And this goes not just for my clients, but for every futures and options account in the United States. The entire system has been utterly destroyed by the MF Global collapse. Given this sad reality, I could not in good conscience take one more step as a commodity broker, soliciting trades that I knew were unsafe or holding funds that I knew to be in jeopardy.

The futures markets are very highly-leveraged and thus require an exceptionally firm base upon which to function. That base was the sacrosanct segregation of customer funds from clearing firm capital, with additional emergency financial backing provided by the exchanges themselves. Up until a few weeks ago, that base existed, and had worked flawlessly. Firms came and went, with some imploding in spectacular fashion. Whenever a firm failure happened, the customer funds were intact and the exchanges would step in to backstop everything and keep customers 100% liquid – even as their clearing firm collapsed and was quickly replaced by another firm within the system.

Everything changed just a few short weeks ago. A firm, led by a crony of the Obama regime, stole all of the non-margined cash held by customers of his firm. Let’s not sugar-coat this or make this crime seem “complex” and “abstract” by drowning ourselves in six-dollar words and uber-technical jargon. Jon Corzine STOLE the customer cash at MF Global. Knowing Jon Corzine, and knowing the abject lawlessness and contempt for humanity of the Marxist Obama regime and its cronies, this is not really a surprise. What was a surprise was the reaction of the exchanges and regulators. Their reaction has been to take a bad situation and make it orders of magnitude worse. Specifically, they froze customers out of their accounts WHILE THE MARKETS CONTINUED TO TRADE, refusing to even allow them to liquidate. This is unfathomable. The risk exposure precedent that has been set is completely intolerable and has destroyed the entire industry paradigm. No informed person can continue to engage these markets, and no moral person can continue to broker or facilitate customer engagement in what is now a massive game of Russian Roulette.

I have learned over the last week that MF Global is almost certainly the mere tip of the iceberg. There is massive industry-wide exposure to European sovereign junk debt. While other firms may not be as heavily leveraged as Corzine had MFG leveraged, and it is now thought that MFG’s leverage may have been in excess of 100:1, they are still suicidally leveraged and will likely stand massive, unmeetable collateral calls in the coming days and weeks as Europe inevitably collapses. I now suspect that the reason the Chicago Mercantile Exchange did not immediately step in to backstop the MFG implosion was because they knew and know that if they backstopped MFG, they would then be expected to backstop all of the other firms in the system when the failures began to cascade – and there simply isn’t that much money in the entire system. In short, the problem is a SYSTEMIC problem, not merely isolated to one firm.

Perhaps the most ominous dynamic that I have yet heard of in regards to this mess is that of the risk of potential CLAWBACK actions. For those who do not know, “clawback” is the process by which a bankruptcy trustee is legally permitted to re-seize assets that left a bankrupt entity in the time period immediately preceding the entity’s collapse. So, using the MF Global customers as an example, any funds that were withdrawn from MFG accounts in the run-up to the collapse, either because of suspicions the customer may have had about MFG from, say, watching the company’s bond yields rise sharply, or from purely organic day-to-day withdrawls, the bankruptcy trustee COULD initiate action to “clawback” those funds. As a hedge broker, this makes my blood run cold. Generally, as the markets move in favor of a hedge position and equity builds in a client’s account, that excess equity is sent back to the customer who then uses that equity to offset cash market transactions OR to pay down a revolving line of credit. Even the possibility that a customer could be penalized and additionally raped AGAIN via a clawback action after already having their customer funds stolen is simply villainous. While there has been no open indication of clawback actions being initiated by the MF Global trustee, I have been told that it is a possibility.

And so, to the very unpleasant crux of the matter. The futures and options markets are no longer viable. It is my recommendation that ALL customers withdraw from all of the markets as soon as possible so that they have the best chance of protecting themselves and their equity. The system is no longer functioning with integrity and is suicidally risk-laden. The rule of law is non-existent, instead replaced with godless, criminal political cronyism.

Remember, derivatives contracts are NOT NECESSARY in the commodities markets. The cash commodity itself is the underlying reality and is not dependent on the futures or options markets. Many people seem to have gotten that backwards over the past decades. From Abel the animal husbandman up until the year 1964, there were no cattle futures contracts at all, and no options contracts until 1984, and yet the cash cattle markets got along just fine.

Finally, I will not, under any circumstance, consider reforming and re-opening Barnhardt Capital Management, or any other iteration of a brokerage business, until Barack Obama has been removed from office AND the government of the United States has been sufficiently reformed and repopulated so as to engender my total and complete confidence in the government, its adherence to and enforcement of the rule of law, and in its competent and just regulatory oversight of any commodities markets that may reform. So long as the government remains criminal, it would serve no purpose whatsoever to attempt to rebuild the futures industry or my firm, because in a lawless environment, the same thievery and fraud would simply happen again, and the criminals would go unpunished, sheltered by the criminal oligarchy.

To my clients, who literally TO THE MAN agreed with my assessment of the situation, and were relieved to be exiting the markets, and many whom I now suspect stayed in the markets as long as they did only out of personal loyalty to me, I can only say thank you for the honor and pleasure of serving you over these last years, with some of my clients having been with me for over twelve years. I will continue to blog at Barnhardt.biz, which will be subtly re-skinned soon, and will continue my cattle marketing consultation business. I will still be here in the office, answering my phones, with the same phone numbers. Alas, my retirement came a few years earlier than I had anticipated, but there was no possible way to continue given the inevitability of the collapse of the global financial markets, the overthrow of our government, and the resulting collapse in the rule of law.

As for me, I can only echo the words of David:

“This is the Lord’s doing; and it is wonderful in our eyes.”

With Best Regards-
Ann Barnhardt

Source: http://barnhardt.biz/

Ann Barnhardt addendum: “There is some confusion as to what I (formerly) did for a living via BCM. I am not a ‘hedge fund’ or a ‘money manager’. I am an old-school commercial hedge broker specializing in CATTLE and GRAIN. Farmers, ranchers, etc. Actual hedging of actual cattle and grain using futures and options. Very old-school original.”

Congressional Insider Trading Scam – our Rule of Law doesn’t apply to the 1% who run the Government and the Country

Alexander P Morris — Wed, 16 Nov 2011 00:15:19 +0000

CBS News’ Steve Kroft reports that members of Congress can legally trade stock based on non-public information from Capitol Hill. We’ve already discussed this type of corruption in the past, and it’s great to see the issue receive so much more widespread publicity… You also see by Nancy Pelosi’s attitude how a two-tiered “Rule of Law” is practically considered a “congressional entitlement” at this point. Hint to OccupyWallStreet protesters, HERE IS YOUR REAL ONE PERCENT!!! (actually, more like the truly thieving and conniving .1% who want you to grant them even more money and power)

(CBS) “The buying and selling of stock by corporate insiders who have access to non-public information that could affect the stock price can be a criminal offense, just ask hedge fund manager Raj Rajaratnam who recently got 11 years in prison for doing it. But, congressional lawmakers have no corporate responsibilities and have long been considered exempt from insider trading laws, even though they have daily access to non-public information and plenty of opportunities to trade on it.”

“So in 2004, Baird and Congresswoman Louise Slaughter introduced the STOCK Act which would make it illegal for members of Congress to trade stocks on non-public information and require them to report their stock trades every 90 days instead of once a year. .. Kroft: How far did you get with this? Baird: We didn’t get anywhere. Just flat died. Went nowhere. Kroft: How many cosponsors did you get? Baird: I think we got six. Kroft: Six doesn’t sound like a very big amount. Baird: It’s not, Steve. You– you could have– ‘National Cherry Pie Week’ and get 100 cosponsors. When Baird finally managed to get a congressional hearing on the STOCK Act, almost no one showed up. It’s reintroduced every session, but is buried so deep in the Capitol we had trouble finding congressmen who had even heard of it.”

“And former House Speaker Nancy Pelosi and her husband have participated in at least eight IPOs. One of those came in 2008, from Visa, just as a troublesome piece of legislation that would have hurt credit card companies, began making its way through the House. Undisturbed by a potential conflict of interest the Pelosis purchased 5,000 shares of Visa at the initial price of $44 dollars. Two days later it was trading at $64. The credit card legislation never made it to the floor of the House.”

“In the past few years a whole new totally unregulated, $100 million dollar industry has grown up in Washington called political intelligence. It employs former congressmen and former staffers to scour the halls of the Capitol gathering valuable non-public information then selling it to hedge funds and traders on Wall Street who can trade on it.”

Martin Armstrong on the Sovereign Debt Crisis

Alexander P Morris — Sat, 12 Nov 2011 01:21:36 +0000

(MartinArmstrong) “Politicians everywhere are sitting on their hands because they believe that if they do nothing and maintain the status quo mixed with austerity to save the bankers somehow we will grow our way out of this one as before. The problem is they fail to distinguish between a private generated financial crisis and a Sovereign Debt Crisis where they are the problem.

The people are just not to be given a right to vote on any of this and if the system can grow out of it, in two years everyone will forget about it – that’s the plan. To clarify why I have been critical of the austerity in Greece and the property taxes, Schumpeter describes the Business Cycle as a force of Creative Destruction. These are periods of tremendous economic transition. It is one thing to impose property taxes and insist upon government reducing its work force that sound like solid conservative economic advice for Greece. However, that presumes there are private sector jobs waiting in the wings. What is taking place in Greece is that there is no private sector alternatives at this time. Laying people off is one thing. To impose then property taxes that are due irrespective of income then subjects those same people to massive waves of foreclosures for failure to pay the tax. The US Great Depression was so bad NOT because of the stock market crash, but (1) the sovereign debt crisis that wiped out savings and reduced capital in the USA contributing to over 3000 bank failures, and (2) the Dust Bowl that eliminated agrarian jobs when agriculture accounted for 40% of the civil work force resulting in the ‘hobo’ lifestyle. It was WWII that provided the ‘transition’ reducing unemployment and transformed farmers into skilled labor. The Great Depression after the Panic of 1857 was followed 4 years later by the US Civil War, which was also the ‘transition’ at that time relieving unemployment.

Today, there is no plan. There is no transition, only austerity. The politicians are doing NOTHING whatsoever for any reforms they reject because it would change the way they have been doing business since WWII. Italy’s debt is bigger than Spain, Portugal, and Greece combined. It is too big to be bailed out and there is no PLAN B to even address what happens if sitting on their hands blows up in everyone’s face? Stay away from ALL government debt! This is a wave of Creative Destruction. We are in a transition to a completely new world ahead.”

Full Story: Italian Head of State Pledges to Resign Schumpeter’s Creative Destruction? (MartinArmstrong)

(MartinArmstrong) “Government Is Living in a State of Denial. They speak, see & hear nothing of a debt crisis. .. Italy is the third largest bond issuer and nobody in government has figured out that this a Sovereign Debt Crisis yet? What Government FAILS to understand is they are the PROBLEM!

Because government is the PROBLEM, they live in a state of denial and cannot correct the situation for they cannot objectively look at themselves. Instead, they attack the people. Fannie Mae asks for $7.8bn as losses continue. Morgan Stanley has been accused over mortgage bond issues and MF Global goes bust exposing the truth that SEC & CFTC never audit the NY banks and are incapable of detecting that they may be trading with client’s money.

.. the whole theory upon which the banking system has been constructed is unsound. Banks take short-term and demand deposits and lend long-term. When a financial crisis unfolds, a run on banks emerges because people want their money. Since the bank’s obligations are short-term to demand but their assets are loans of medium to long-term, they don’t have the cash and fail. For you see, banks were not supposed to lend out your money. .. Banks began as merely a place to store your assets. They were not intended to lend your money out to someone else. When they realized they could make profit doing so, the scam eventually became the standard operational procedure. Formulae were then devised to calculate at any one time how much ‘reserves’ did they have to retain for normal operations. That was worked out with experience settling on 6%. So if they retained 6% of deposits as cash, they could cover normal business withdrawals with no problem. The problem became during a crisis and everyone wanted their cash and the bank simply does not have that cash and you end up with a bank run. It is ironic that what began as a scam simply became institutionalized. This is WHY the entire financial system is dependent upon CONFIDENCE!

What is unraveling even more quickly is the fear that banks will be hit with panic runs because of their holdings in sovereign debt. After a 50% haircut in Greek bonds, now it has become trendy not only to sell Italian bonds but also to publicly announce they have done so to try to maintain CONFIDENCE of their depositors. The very reason politicians have suppressed the right of the people to vote and have forced austerity upon the people, has been to maintain the confidence of their bankers. But in the end game, the bankers exist based upon the confidence of the people in their sound management of their deposits.

.. The people may be shut out of the polls denied democracy when it is needed most, but the FREE MARKETS will respond as capital votes in its own self-interest that does not match the political nonsense.

SEQUENCE OF AN ECONOMIC PANDEMIC

At first blush, how capital responds depends entirely upon the (1) monetary system and (2) the freedom of capital movement. In a closed economy, the first reaction is to buy ALL tangible assets. These tend to be everything from durable commodities (metals), art, coins, stamps, and gold (assuming it is not a gold standard of some sort). This is the category I refer to as ‘moveable assets’. The second tier of assets tend to be real estate that I refer to as ‘fixed non-movable assets’ meaning their value is limited to the territorial jurisdiction of the nation. In a non-communist nation, stocks and corporate bonds will also attract capital as a safe place to park funds. In an open-economy where capital is free to leave, then the first blush is to FLEE to a different land in which case the local assets, including stocks and corporate bonds, will initially crash. This is typically indicated most pronouncedly in the collapse of the local currency against world currencies or in this case rise in the dollar vs decline in euro. They eventually swing back ONLY after the crisis manifests in a new currency or a debased/devaluation of the local currency takes place. The capital-flows will the swing back in the opposite direction.

Under today’s circumstances, the first blush response will be for capital to flee Europe and run to the United States as a safe port parking in US government paper. This is likely to further the deflationary effects within the United States by ensuring interest rates remain low as they did during the Great Depression for the same reason. However, banks are living off of the largest spreads perhaps in modern history so while rates of interest on cash will decline further and move in real terms NEGATIVE after inflation, banks should NOT be expected to lend money more easily. They will maintain their huge profit margins. Therefore, the first blush of the Sovereign Debt Crisis in an open society tends to be currency based rather than even movable assets.

During the inflationary boom into 1929, gold declined in purchasing power for assets were rising against gold. During the collapse, the value of money rose (gold) as assets declined. Under a gold standard, the value of gold in fact DECLINES with inflation and RISES with deflation.

So for now, we are in the first blush mode where capital will fee to the dollar rather than assets and that may confuse the hell out of a lot of people. Therefore, under the current conditions, gold need not rise on the first blush for the bulk of capital will flee to the dollar. On the second swing where capital flees all currency, then we will see the Private vs Public assets manifest meaning they will rise as expressed in terms of currency.”

Full Story: Government is Living in a State of Debt Denial (MartinArmstrong)

Click for Nov 11, 2011 Martin Armstrong Radio Interview (FSN)

Jon Stewart on Jon Corzine and MF Global, “The Walking Debt”

Alexander P Morris — Thu, 10 Nov 2011 04:00:42 +0000

(JonStewart) “Politician Jon Corzine saw Lehman Brothers as a cautionary tale; financial firm honcho Jon Corzine saw it as a dare.”

I don’t always agree with Jon Stewart, but he’s pretty much got it right on the money on this one…

(TheMarketTicker) “Let us remember that MF Global was just added to the primary dealer list in 2010! The bankruptcy does raise questions, however, about how the Fed picks the primary dealers — especially since MF Global was one of four firms added to the ranks after new, more stringent requirements were put in effect in 2010.”

Full Story: MF Global – Trillions in Bailouts, Loads of New Regulations, yet nothing has changed (vlogolution)

(PeterBrandt) “The media is missing the real story in the sad saga of MF Global. The story is not the big bet in Europe by MF Global that went south. The story is not the risk-taking ways of Jon Corzine.

The real story is the ineptness of federal regulators (so, what’s new). The real story is that speculators may end up holding an empty bag right under the noses of the U.S. government regulators responsible for their protection. The present administration appears unwilling to step up to the plate. The Obama administration bailed out AIG, Deutsche Bank, Fannie, Freddie and a whole bunch of other crooks along the way. But when it comes to protecting the integrity of futures markets, the powers that be (or should be) are MIA.

If segregated account holders of MF Global are stiffed it will be the end of market integrity as we know it. Free market lovers everywhere, do NOT under-emphasize the importance of this matter. The MF Global situation could be the leak in the dike that will flood the financial system as we know it. If segregated account holders in a federally regulated market are not protected, what is next?”

Full Story: Futures traders: Be concerned, be very concerned (PeterBrandt)

(PeterBrandt) “Futures markets and futures commission merchants (FCMs) are supposed to be highly regulated by the Commodity Futures Trading Commission (CFTC). If MF Global’s seg customers are not fully protected, it would be the equivalent of, let’s say, depositors of Chase bank or customers of Fidelity not being protected.

The failure of MF Global’s segregated account to be made whole would be the biggest financial disaster since 1929 and would spell the end of the futures industry as we know it. Folks in the financial industry should take this matter seriously — very seriously. Do not underestimate the importance of this matter.”

Full Story: MF Global — 2011′s version of 1929 (PeterBrandt)

CON-fidence is for CON-Men

Alexander P Morris — Mon, 07 Nov 2011 23:30:17 +0000

(Interloper) “Mr. Achuthan has been arguably the most accurate economic forecaster over the past five years and perhaps more importantly, is apparently using new analytical techniques and indicators – his emphasis on short and long-leading economic indicators is an excellent example. As he noted this morning, he was virtually alone among prominent economists in predicting a slowdown for the latter half of 2011, even if his predicted official recession has yet to become evident.”

” .. Achuthan presented his view that despite recent stronger data a US recession was still on tap, followed by Steve Liesman (fairly) asking ‘What about recent stronger GDP and consumer spending data’, followed by Achuthan saying that it didn’t matter because there is contagion in the data whereby more indicators were turning negative, followed by Liesman asking (again fairly) ‘like what’, and Achuthan responding something like ‘it doesn’t matter what, it matters how many‘. .. Liesman continued to badger his guest with ‘what do investors do today?’ ”

“.. Achuthan, in other words, is telling investors you something you will not hear from any employee of a brokerage or investment bank (well, maybe SocGen): wait.”

“.. My real issue is with those who will complain, ‘Why would I listen to that guy? He can’t even tell me which indicator he’s basing his conclusion on’. These people want THE ANSWER, stated bluntly, with conviction. To these people I respond; there is nothing you should be more afraid of than a market pundit who is certain.”

“Certainty is a tremendous marketing tool but there is a reason that the ‘con‘ in con man is short for confidence. Remember that it would only take one highly-leveraged trade to make someone wealthy enough to never work again. This implies that if the ‘certain’ dude (and its 99% of the time a dude) was really 100% sure, they would be leveraged 200-1 on the trade and, if it were successful, you’d never see them again outside of Saint Tropez-situated photos in celebrity magazines. In truth they are not sure – it’s a marketing gimmick to attract your investment dollars.”

“We are naturally attracted to certainty and we want to believe that someone has the answer because psychologically the random nature of markets is repellent. But in the end it is most often a trap and all investors should remember what a portfolio manager once told me: ‘People don’t like to hear it but we are in the probability game, not the certainty game.’ ”

Full Story: Liesman vs Achuthan and why investors should be terrified of certainty (Interloper)

Strategic Ideas are Everywhere – it’s Execution Talent that’s Lacking

Do you know the Counterparty Credit Risk of your ETFs and ETNs?

Alexander P Morris — Fri, 04 Nov 2011 22:08:14 +0000

(GlobeInvestor) “ETNs expose investors to the risk of losing all or most of their principal. That’s because ETNs are set up as unsecured, long-term debt obligations of the issuer, Ms. Pelant explains. ETF investors don’t face the same default risk because ETFs own a pro rata stake in a basket of stocks, bonds, or derivatives held by a custodian in trust and legally separate from the issuer, she says.”

“When Morgan Stanley’s viability came under question in September , its family of Market Vectors ETNs sold off dramatically. ‘The Market Vectors Remnimbi/USD ETN (CNY) plunged more than 25 per cent versus a 1-per-cent drop in a comparable ETF,’ observes Greg Newton, a veteran financial journalist who writes the NakedShorts blog.”

However, if the ETFs don’t actually hold the securities that make up the fund, and instead use synthetics or swaps rather than physicals, investors may also be exposed to much more credit and counter-party risk than they realize. And as Jeffrey Gundlach discussed at the recent DoubleLine Luncheon at the New York Yacht Club, “Never, ever take counterparty risk. It is the one risk you are almost never rewarded for taking. Unless you are running $800 billion dollars, there is no need to use swaps, synthetics or baskets – trade cash markets and avoid any trades that require a counterparty.”

(HistorySquared) “In light of the counter party risks inherent in ETFs, especially those that use synthetic swaps rather than the physicals, there might be an inexpensive way to express a bearish view on some of the European banks.

For example, in 2008 Lehman Brothers had several failed ETNs. ‘The three ETNs were Opta Lehman Commodity, Agriculture and Private Equity. In September 2008, these ETNs halted trading when Lehman Brothers failed. Currently, the final results are being sorted out, but it appears that Lehman ETN holders will receive 2 cents on the dollar from their original investment.’ ”

These are some clever lower-risk trading ideas for expressing a bearish view on the future solvency of a particular counterparty:

“Perhaps there are some far OTM options on some of the Socgen ETFs that are worth a look . Or a less risky trade could be long an ETF with physicals underlying the ETF that is issued by a more secure bank, and short the highly correlated Socgen ETFs. A potentially catastrophic event could be triggered by Deutsche Banks popular x-trackers.”

Full Story: ETFs as Tail Risk Trades (HistorySquared)

(Bloomberg) “ETFs that use swaps to clone stock, bond or currency returns have been criticized by regulators and firms including Fidelity Investors, which say clients risk losing money should the banks writing the derivatives become insolvent. Outflows from Lyxor are another blow to Societe Generale, France’s second-largest bank, whose shares have tumbled this year as the escalating sovereign-debt crisis squeezes lenders’ funding.

‘It’s an issue of counterparty risk related to the financial health of the backing bank,’ said Jose Garcia Zarate, an ETF analyst at Morningstar Inc. in London. ‘Fears over synthetic replication have been building up, and at the same time, fears of banks’ peripheral-debt exposure have grown. Put those two together: bingo!’ ” — Swap ETFs, Lyxor Have Record Outflows (Bloomberg)

$GRPN Groupon IPO up 50% what a steal! Of foolish investor capital, that is…

Alexander P Morris — Fri, 04 Nov 2011 15:44:06 +0000

(TheMarketTicker) “Like paper coupons a Groupon has a ‘use by’ date. They’re attempting to leverage social media to ‘widely distribute’ the Groupons to consumers, and for this they get a piece of the action. The merchant effectively pays a ‘vig’ to Groupon for running the distribution system and collecting the money; once a Groupon is redeemed the merchant gets the paid price less a discount.”

“You, the merchant, are selling a “regular” $40 product or service for $20. But in fact it’s not $20; Groupon takes a piece of the ‘sale price’ of $20 as well, so you might receive $18. And you receive it late: The consumer buys the Groupon from Groupon. This goes to Groupon’s balance sheet as ‘cash’ and the payment to the merchant is an accrued liability. The merchant gets paid only when the groupons are redeemed.”

“Essentially Groupon ‘lives’ on the float. .. the firm is surviving on two things, neither of which is likely to continue: 1. Non-redemption – the consumer buys and then doesn’t use. 2. Delays in payment – Groupon ‘aggregates’ these coupons and pays merchants when the aggregation reaches a given level. They have the use of the money in the meantime. That’s nice for them, not so nice for the merchant who just delivered a good or service they didn’t get paid for in the present tense!”

“I don’t like this one bit as a prospective merchant – especially the second. .. As a consumer I’ll buy a $20 pizza for $10 (one of the deals being offered right now in my area.) But the entire reason I’ll go to that pizza place is that the pizza is $10 — at $20 I’m not a customer! In this particular case the merchant gets nothing for their trouble except a guaranteed loss and delayed payment! It’s not a ‘loss leader’ as I won’t come back without the discount, it’s a loss maker.”

“I don’t see the business case for this company as I don’t see the sell-through on a consistent, forward basis. Consumers will always take something for free: The store willing to give away steak will give away every piece of it they have! That’s not the question: Will the people then come back and pay full price for the second slab of meat?”

Full Story: Groupon: Another Pets.Com (TheMarketTicker)

Groupon isn’t even profitable, though losses “appear” to be narrowing. It posted a net loss of $10.6 million in the third quarter, compared with a net loss of $101.2 million in the second quarter. And for the short period of time the stock was trading north of $30/share, the company was being valued above $19 BILLION. Even if they earned $100 Million next year, that would be about equivalent to receiving 1/2% annual interest that you can’t collect for all the risk incurred. And people wonder why they lose money investing… Well, it should at least make for some “fun” bubbley chatter at the next cocktail party.

Anyway, back to watching investors play hot potato with $GRPN.

First day of trading UPDATE:

Are there any Safe Haven Plays in times of Crash or Crisis?

Alexander P Morris — Thu, 03 Nov 2011 23:51:05 +0000

(TheHippo) “The reality of the matter and one that I have believed in is that during crisis there is NO SAFE HAVEN! It is a figment of your imagination and the collective mind of the market. As a friend of the family who was a trader said, ‘when markets drop the correlation becomes 1′. What he was saying is that when a crisis occurs there is no safe haven and there is no place to hide.”

“So then the question becomes what does one do? Outside of the obvious, which is short the market. Go back and look at the charts and look at what happened EACH AND EVERY TIME. The market went back up. This should not be a surprise to you, and should be rather obvious. Yet nobody during those times says, ‘buy equities, bonds, though they did say buy gold’. All you hear are about Safe Haven plays (which don’t work) and how you need to step back and wait.”

“I am a numbers guy. I focus on the statistics and let it define my plays. So when you see these charts a dropped market is a screaming buy! It does not matter what, but everything is a screaming buy. So why don’t people buy? .. Easy answer it’s about the psychology. Buying in times of market turmoil is very very difficult. I have read this Contrarian book that said people would rather be wrong with the crowd than be right in the individual.”

Full Story: Understanding Safe Haven Plays and Market Turmoil $AGG, $PCY, $GLD, $BTI (Haah-TheHippo)

In times of turmoil, your only real safe haven is holding straight CASH in your home currency. Your greatest defense against future crisis and turmoil is proper position sizing (keep your positions small and manageable), stay clear of leverage (especially overnight), and always keep a chunk of cash on hand to take advantage of any great opportunities that may arise. From the article, $PCY (PowerShares Emerging Mkts Sovereign Debt ETF) looked mighty interesting around those October 2008 lows. Historically speaking, many great fortunes have been some of the greatest fortunes made have been in times of crisis. Find opportunity when others panic, and keep your position size small and manageable so that you can always consider adding a bit more if the opportunity becomes even juicier.

Greece – Democracy Dies to Protect European Banks

Alexander P Morris — Thu, 03 Nov 2011 21:19:04 +0000

(Mish) “We will not get to see the precise wording of Prime Minister George Papandreou’s referendum because enough cowards in the Greek parliament in conjunction with blackmail by Merkel and Sarkozy have put an end to Papandreou’s regime. Thus, the on-off on-off Greek referendum is once again set to ‘off’ this time permanently.”

(NYTimes) “Europe’s leaders should have paid more attention to the distress of ordinary Greeks and less to the distress of well-heeled European bankers. Rather than trying to punish the ‘profligate,’ they should have thought about the consequences of condemning Greece to years of negative growth, soaring unemployment and rising taxes with nothing promised in return except that maybe, a decade from now, its ratio of debt to gross domestic product might get back down to the problematic levels of 2008-9.

Greece needs to make serious, painful reforms, including doing away with antiquated labor rules, streamlining a bloated public sector and selling off poorly managed state assets. Mr. Papandreou was already making real progress. But it was becoming impossible to keep laying off thousands of state workers while austerity choked off any realistic possibility of their finding private sector jobs or to keep slashing social benefits and services while the numbers of poor and unemployed surged.

It is late but, we hope, not too late to avert a full meltdown. Europe’s leaders need to renegotiate the pending Greek bailout deal to emphasize reform and growth over unremitting austerity and offer other bailout applicants the same approach. If they want any of the money lent to Greece paid back, Athens needs room to grow and earn.” — Greece on the Brink (NYTimes)

(Mish) “Democracy Dies to Protect Banks – Indeed, resolution of this mess has been 100% about how to bail out banks at taxpayer expense even though banks brought this mess onto themselves by treating sovereign debt as if it had zero risk. Worse yet, banks plowed into sovereign debt trades with massive leverage.”

Notice the tight convergence of all Eurozone country sovereign debt interest rates before 2009. European banks and other investors placed foolish bets anticipating little or no additional risk. They priced in virtually no risk premium holding Greek bonds over German bonds.

(Mish) “Merkozy and the EMU ought to be spending time on developing a full blown Euro exit strategy for nations because there has never been a currency union in history that has survived without a fiscal union in place at the same time.”

Full Story: Eurozone’s Waterloo; Papandreou Forced to Cancel Referendum; Democracy Dies to Protect Banks; Germany’s Dilemma: The Eurocratic Nanny Zone Vote (Mish)

(MartinArmstrong) “The most important aspect is the economy. Screw that up and you get war, depression, and starvation. We then elect a whole bunch of people to posts and automatically assume these people have the (1) real intelligence ABOVE average to comprehend such complex subjects, and (2) they understand the right thing to do. Where did we ever get these ideas? Most of the staff members employed by politicians are smarter than the people they work for. But unless they believe an economic crisis is possible, they will not even look at the issue.” — Martin Armstrong, Happy Days Are Here Again

Sloping or Horizontal Trendlines – Which are more trustworthy for trading?

Alexander P Morris — Thu, 03 Nov 2011 16:00:08 +0000

(StockChartist) “I often cringe when I see charts posted on other sites where the author inserts a sloping trendline and then jumps to the conclusion that the trendline will act as some sort of wall of support or resistance as the case may be. The first thing I do when I look at the same chart on my system is to look for and usually find what might be horizontal lines that project a dramatically different interpretation. The question is “Which trendline, sloping or horizontal, prevails and trumps the other?” In making a decision as to whether to buy (or sell) and two lines lead to different conclusions which should you pay more attention to?”

“.. if I have to choose between an ascending (or descending) trendline and a horizontal one to drive my decisions I would look to the horizontal one. I can’t easily calculate where the trendline will be a month or two out. But I can easily see whether there are any horizontal trendlines that mark where buyers and sellers have traded places for control of a stock’s trend. Those are the transfers of power that I rely on to help me anticipate what might be ahead for a stock (or Index).”

Full Story: Sloping or Horizontal Trendline: Which is More Trustworthy? (StockChartist)

(PeterBrandt) “How a chartist draws a line can make all the difference in the world between a good call or a bad call, a profit or a loss.”

“.. ‘Brandt, you are bearish one day, bullish the next and bearish the next. Can you make up your mind?’ The answer is a loud, ‘NO!’ I am a chartist. I believe that charts provide set ups with certain reward to risk parameters and trigger points. I do not believe that charts are useful for price forecasting. I am on record with this stance dating back 30 years. When I get a chart screaming a certain message I develop a strong opinion, weakly held. I will hold and state that opinion until the price action tells me something else. Then my scream will carry a different message.”

Full Story: The two faces of Silver (PeterBrandt)

Greece – is it so bad to offer the people a choice, and why are Eurocrats so terrified of Democracy?

Alexander P Morris — Wed, 02 Nov 2011 12:54:10 +0000

(Mish) Great article by Mike Shedlock on the Greek/Euro Dilemma – “Is there any reason Greek voters should not be given a choice? I think not. They may not make a wise choice but what is the likelihood that political hacks and political opportunists will?”

“Take a good look at Iceland. In repeated attempts, political hacks (with banker’s interests in mind) attempted to sell Icelandic citizens into debt slavery. A referendum saved the day. Sadly, voters were forced to repeat the referendum, and once again voters made the correct decision. .. Iceland is now in full recovery simply because it told the EU and IMF to go to hell.”

“Greece does not have an easy way out. However, its problems are no doubt far worse than if it told the EU and the IMF to go to hell two years ago. Greece should have gone bankrupt long ago. Heck, it should not be in the EU in the first place, and the EU is primarily to blame even though Greece lied to get in.”

“(PeterTchir) If a leader in the Middle East finally gave into months of protest and decided to give the people a real say on an important issue, the Western leaders would be rejoicing. .. But if a fellow Western leader dares let his people express their wishes more directly than via “their representatives” they are all shocked and outraged. In the meantime other Greek politicians are busy taking advantage to gain power rather than helping their citizens.”

“(PaterTenebrarum) The eurocracy is at its heart deeply undemocratic – if it were up to the ‘technocrats’ leading it, national subsidiarity would have long ago become a relic of the past and democratic interference with their plan to erect a socialist super-state would be kept to a bare minimum. .. This can be seen by the fate suffered by previous referendums: when the Irish and French e.g. said ‘no’ and ‘non’ respectively to the Lisbon treaty, the referendums were simply repeated to get the ‘right’ result. As Stalin once sagely remarked, it doesn’t matter who votes for what anyway – what matters is who counts the votes. So far, the eurocrats have always gotten the results that they wanted, by hook or by crook.

Shall I tell you the truly terrifying thing about the EU? It’s not the absence of democracy in Brussels, or the ease with which Eurocrats swat aside referendum results. It’s the way in which the internal democracy of the member states is subverted in order to sustain the requirements of membership. ..

I wish I could convey the sheer horror that his proposal provoked in Brussels. The first rule of the Eurocracy is “no referendums”. Brussels functionaries believe that their work is too important to be subject to the prejudices of hoi polloi (for once, the Greek phrase seems apposite). Referendums are always seen as irresponsible; but, at a time when the euro is teetering on the brink, Papandreou’s proposal was seen as an act of ingratitude bordering on treason. ..

Eurocrats are prepared to pay any price rather than admit that the single currency was a mistake – or, more precisely, to expect their peoples to pay, since EU officials are exempt from national taxation. The peripheral countries are to suffer poverty, unemployment and emigration, the core countries perpetual tax rises, so that supporters of the euro can save face.”

“(DanielHannan) Euro-enthusiasts in Brussels and in Athens are ready to bring down an elected government rather than allow a referendum. Yet the funny thing is that Papandreou is a Euro-enthusiast. He fervently wants to remain in the euro, and had been planning to campaign for a Yes vote. His sin, in the eyes of Brussels, was not to hold the wrong opinions, but to be too keen on democracy. ..”

“Whose Skin Are We Saving? No eurocrat or politician outside of Greece gives a rat’s ass about helping Greece. The only skin they want to save is their own. That realization coupled with my earlier proposal that Papandreou was tired of beatings, meetings, and riots is by far the most likely reason Papandreou decided to “walk away” from the mess via referendum.”

Full Story: In Praise of Papandreou’s Referendum Decision; Eurocrats Terrified of Democracy; Parade of Cowards (Mish)

As usual, this is more about bailing out the banks and protecting those who made foolish investments above all else. It’s also interesting to note that while private bond holders of Greek debt was expected to take a 50% haircut, my understanding is that the ECB (who currently owns about half of all outstanding Greek bonds) would still be holding their Greek bonds at par.

This is not to say Greece is not also at fault. There’s plenty of blame to go around. However, to this day the War Reparations forced upon Germany after World War I are still largely blamed for leading Germany into hyperinflation and the eventual rise of Hitler. And perhaps Germany eventually owning and/or controlling most of Greece’s key assets to pay back its debts is not something those “pesky” Greek citizens are willing to accept quite that easily.

Regarding Papandreou’s recent changes to his top military staff, while only Papandreou and his closest confidants know exactly what’s going on, given he called a referendum to offer the people a “say”, it would seem unlikely he is considering a “military coup”. I would speculate his motive would more likely be to assure that the military will remain loyal to the “best interests of Greece”, as opposed to the “best interests of the European Union”.

How US Job Losses and Offshoring Will Start to Decline

Alexander P Morris — Wed, 02 Nov 2011 11:29:20 +0000

(SeekingAlpha-MHFT) “Textile workers earn $2.99 an hour in India ($PIN), $1.84 in China ($FXI), and $0.49 in Vietnam ($VNM).”

“This compares to the $8 an hour our much abused illegals get at sweat shops in Los Angeles, and $10 in some of the nicer places. What’s more, the Indian wage is up 17% in a year, meaning that inflation is casting a lengthening shadow over the sub continent’s economic miracle. A series of strikes and a wave of suicides have brought wage settlements with increases as high as 20% in China.”

“This is how the employment drain in the US is going to end. When foreign labor costs reach half of those at home, manufacturers quit exporting jobs because the cost advantages gained are not worth the headaches and risk involved in managing a foreign language work force, the shipping expense, political risk, import duties, and supply disruptions, just to get lower quality goods. Chinese wage growth at this rate takes them up to half our minimum wage in only five years.”

“This has already happened in South Korea ($EWY), where wage costs are 60% of American ones. As a result, Korea’s GDP growth is half that seen in China. These numbers are also a powerful argument for investing in Vietnam, where wages are only 27% of those found in the Middle Kingdom, and where Chinese companies are increasingly doing their own offshoring.”

Full Story: How US Job Losses Will End (SeekingAlpha-MHFT)

Reducing overwhelming regulatory burdens and requirements would also go a long way to help reduce unemployment as well:

(PeterSchiff) “In my own business, securities regulations have prohibited me from hiring brokers for more than three years. I was even fined fifteen thousand dollar expressly for hiring too many brokers in 2008. In the process I incurred more than $500,000 in legal bills to mitigate a more severe regulatory outcome as a result of hiring too many workers. I have also been prohibited from opening up additional offices. I had a major expansion plan that would have resulted in my creating hundreds of additional jobs. Regulations have forced me to put those jobs on hold.”

Full Story: Peter Schiff: Before the Congressional Committee of Oversight & Reform (YouTube)

Which “Expert” Portfolio Manager would you choose?

Alexander P Morris — Tue, 01 Nov 2011 21:46:59 +0000

(Interloper) “Outside of the entertainment factor, the primary differences between the two archetypes is that the first has risen to their position by attracting new money while the latter holds their position by effectively managing money. Type One*, with a travel schedule encompassing 150 days annually is dependent of their model for performance because they have much less time for specific analysis – hence the preponderance of more black box, momentum strategies. They are also much more dependent on their analysts and traders back at the office who must make the majority of the day-to-day decisions. Type Two* on the other hand, only really cares about the analysis. They are pissed when the marketing department drags them put of their cave before they’ve finished investigating a fishy footnote in the last quarterly statement. (Don’t think I’m exaggerating with that, btw. I personally know PMs that will spend weeks on a single footnote).”

“Here’s the important part: the industry loves them some Type One PMs. Momentum managers trade a lot more than value managers and this keeps the trading desk commission train rolling. The accommodating Type One manager is, unbelievably, available for evening functions where Financial Advisors can bring their top clients who, inevitably will be running around with blank checks by slide eight. Everybody makes money.”

“If you’ve read this far you have probably guessed where my preference lies. For my own money, I would much rather have the plodding, boring manager who obsesses about every aspect of a potential or existing holding, rarely straying from a concentrated portfolio of companies they are completely comfortable with. Like Buffett, they do not feel compelled to make changes (and thus rarely get referrals from capital markets) and will literally wait years for a stock to drop to valuation levels they find attractive. Type Twos will also avoid hot sectors and thereby escape the attention of the individual investor until the market craps out, and they don’t feel like putting more money into the market anyway. I pay Type Twos, in other words, to exhibit the discipline that I don’t have.”

” .. it remains important to understand the industry’s bias in this regard and that ‘best manager’ may mean something much different to the average investor than on the trading floor.”

* “Type One: Physically attractive, Ivy League (Harvard or Wharton, almost always), momentum-based investment strategy. .. They will be compelling, energetic, will pause and answer your question in a non-patronizing way. They will linger after the presentation until everyone has left, happily chatting about markets or whatever else the fellow-lingerers want to talk about. .. They are, in short, marketing machines.

Type Two will be older, having spent far more time as a senior analyst due to a dearth of personal charisma. They will likely not be Ivy League. Type Two will execute a more fundamentally-based investment process. Their longer performance track record has a better chance of being stronger, beating the index by a few percentage points per year by holding value during bad years. Type Two’s presentation will be so dull that you’ll want to gouge out your eyes after half an hour.”

Full Story: PORTFOLIO MANAGER SEARCH PRO TIP: FIND THE WORST PUBLIC SPEAKER POSSIBLE (Interloper)

And finally, this short passage from Michael Lewis’ book “The Big Short” seems to perfectly capture the essence of these points:

“In Dr. Mike Burry’s first year in business, he grappled briefly with the social dimension of running money. ‘Generally you don’t raise any money unless you have a good meeting with people,’ he said, ‘and generally I don’t want to be around people. And people who are with me generally figure that out.’ He went to a conference thrown by Bank of America to introduce new fund managers to wealthy investors, and those who attended figured that out. He gave a talk in which he argued that the way they measured risk was completely idiotic. They measured risk by volatility: how much a stock or bond happened to have jumped around in the past few years. Real risk was not volatility; real risk was stupid investment decisions. ‘By and large,’ he later put it, ‘the wealthiest of the wealthy and their representatives have accepted that most managers are average, and the better ones are able to achieve average returns while exhibiting below-average volatility. By this logic a dollar selling for fifty cents one day, sixty cents the next day, and forty cents the next somehow becomes worth less than a dollar selling for fifty cents all three days. I would argue that the ability to buy at forty cents presents opportunity, not risk, and that the dollar is still worth a dollar.’ He was greeted by silence and ate lunch alone. He sat at one of the big round tables just watching the people at the other tables happily jabber away. ”

How I wish I had been there that day to sit with him.

Anonymous Letter from an Animal Shelter Manager

Want AFFORDABLE Housing, Healthcare, and Education? KILL FINANCIALIZATION!

Alexander P Morris — Tue, 01 Nov 2011 18:50:58 +0000

(TheMarketTicker) Great article by Karl Denninger sums up our greatest financial problem perfectly… “ is the process by which something very ordinary (say, a TV set) becomes financed. In doing so there is inherently created the use (and usually the abuse) of leverage. .. Leverage is simply the ability to act as though you have much more of something than you really do. ”

“See, in economics there is this thing called ‘supply and demand’. The more demand there is for something with a given supply, the higher the price tends to be. In ordinary times a gallon jug of drinking water in a store is a dollar, and from the tap it costs so little we don’t ordinarily put a price on it. Yet if there was just a hurricane, and there is no fresh water available, what would the price of that same gallon be? Ah, now we have much demand and very short supply, and as such the price will be quite dear. Perhaps the price of that water might be several gallons of gasoline (for the seller’s generator, of course.) So what has happened to our economy over the last three decades? In short, things that never should have been became financialized. And as the goods and services became financialized, demand was shifted upward – people were made “able” to allegedly “buy” things they could not otherwise afford. The expected response in the marketplace to such a thing, predicted by basic economics, was that prices would rise.”

“If you’re wondering why you can’t afford to pay for college by flipping burgers or pizzas in your off hours, this is the reason. It was precisely the distortion of the government making student loan debt non-dischargeable, which made it available to almost everyone at a “low interest rate”, that drove up the price of college educations to the moon. And to the moon they went – up 450% since the 1980s, more than five times as much as average salaries increased.

How about houses? A middle-class house in 1960 sold for $12,000. .. That wasn’t so hard to do when you could buy a house at twice the average income.

What happened when we financialized houses? Prices went up. A lot. They went up much faster than did incomes. First to 3x incomes, and in some parts of the nation in the 2000s they went to utterly ridiculous multiples, like 5, 6 even 10x. How? Nobody ever really actually owned the damn house; the bank owned it and you were turned into a financial slave!“

“How about medical care? In the 1960s your parents wrote a check to the doctor. If it was really serious they probably had insurance; they got billed and then filed a claim. Bankruptcy due to medical costs was extremely rare, and you could almost always afford whatever you needed medical attention for by paying with the money in your wallet.“

“Where do you think that money went? Why, right in the pockets of JP Morgan, Goldman Sachs, Morgan Stanley, Citibank, Bank of America and yes, the bank on the corner. I’m sure you’ve noticed that bank buildings tend to be quite nice. Grand exteriors, high-rise buildings in the middle of cities (very, very expensive real estate), fabulous lobbies with marble floors and other similar visible elements of opulence. Where do you think all the money came from to buy that stuff? Why, from you – the rube standing there in the lobby! Never mind the bankster’s bonuses!”

“Was this all the “free market” at work? Absolutely not! Student loan debt was given “special status” and cannot be discharged in bankruptcy. Fannie Mae and Freddie Mac massively distorted the housing market. Medical insurance companies are exempt from anti-trust laws, and drug makers were given the ability to legally prohibit you from doing what you’d like with what you own (specifically, reselling things you purchased and paid for.)

All of this distortion in the market occurred due to the direct acts of government acting at the behest of fat cat banksters and industry insiders, using the threat of force to strip your wealth.

Every morning in the financial media we hear about how horrible it will be if we put a stop to this financial rape and the financial system’s size and influence shrink dramatically!“

THE SOLUTION

“But what happens if tomorrow all the ‘free money’ loans stop? Now the college has empty classrooms because nobody comes any more. Students can’t afford to attend, so they don’t. What happens the next morning at that college? Oh that’s simple: See, it doesn’t cost much to provide a few desks, chairs, and a roof over head along with a calculus book, does it? Nor does an instructor cost that much when spread across a student body. Let’s see how cheaply a college can educate you, if they’re unable to extract from you promises from the future and must instead talk you into providing them with economic surplus from your current efforts.”

“The important point here is that if we cut off the financialization of college you will still get an education. The schools will scream and many will go bankrupt, but soon on the same ground where there was a bankrupt college there will be a new one, and this one will charge $2,000 a semester to attend instead of $10,000 or $20,000. The difference? You’ll have to pay cash, but you’ll be able to work a part-time job for the two grand and thus you’ll have no debt!”

“Houses are no different and neither is medical care. The screaming about how “nobody will be able to go to the doctor” or “nobody will be able to buy a house” is a lie. The doctor can set his fee at $100,000 for his services if he wants but if nobody can or will pay him $100,000 then he sells no service. That doctor goes bankrupt immediately, soon there will be a different doctor (or maybe the same one after he goes through bankruptcy) and suddenly medical care will be much-more reasonably priced! After all, if nobody can buy then the seller can’t make a living either, can he? Prices will be forced down to what the ordinary person can afford to pay.”

“There is no way that such a price disparity would hold for more than 10 minutes were these laws to be dropped. You get screwed on your prescriptions and devices you buy intentionally by our government through their protection of these industries. You get financially raped so that everyone in the world can enjoy our medical technology at the mere reproduction cost and the banksters and drug companies can get rich. It’s an outrage and again, it happens due to financialization of the medical industry and the force of government coercion, NOT the free market.”

“You can bet the banksters, universities, medical societies and housing industry insiders know this, and they’re scared. They know that if you figure it out their income is cut in half or more. They are returned to middle-class working people rather than the fat cat status they enjoy today. Doctors, college professors, home builders, bankers and Realtors used to be middle-class citizens, not gold-clad elites driving around in Lamborghinis and living in mansions!

What’s worse (to them) is that if you succeed in breaking the back of financialization these people will lose the ability to enslave you. You will have returned to yourself the power to choose when you work, how hard you work, and what you do with your own economic surplus, instead of having pledged it to the bank to buy the car, the bank to buy the house, and the insurance company in the event you get sick.”

“We did not find ourselves here because of the “free market.” We are here because the rich and powerful demanded special protections from government that allowed them to enslave you, they enticed you into taking that first hit off the crack pipe of cheap money, and then once you were hooked good they used the jackboot of the government to screw you through changes in the law and special protections for themselves so that you could not easily escape. The solution is not to demand “free stuff” or “fairness.” The only solution is to remove the excess leverage from the economy – to get rid of the debt that has been accumulated and force recognition of the fact that not only are many people bankrupt but the financial institutions are as well. Only when the balance sheets on both sides are cleared can the economy.”

Full Story: OWS: Want To Turn The Tide? (TheMarketTicker)

If the “bad rich” always find manage to find ways to control and manipulate the government, why do so many want to empower them further with addition tax revenue, regulatory power, and more spending, … For all the calls to “more heavily tax the rich”, let’s finally go after the real controlling, manipulative, and politically-connected “rich” people / politicians / banksters / special interest groups, and stop empowering those who are the greatest benefactors of people’s rage and “wealth redistribution” agenda. Let’s also call for a return to a fair and balanced “Rule of Law“.

And for the record, I don’t consider myself a Republican, a Democrat, or a Libertarian, so much as a “Classical Liberal“.

MF Global – Trillions in Bailouts, Loads of New Regulations, yet nothing has changed

Alexander P Morris — Tue, 01 Nov 2011 16:55:10 +0000

(TheMarketTicker) “.. there’s really nothing more-serious than grabbing client funds internally, and it appears to have happened in the case of MF Global… It’s black-letter wrong, and The ‘mainstream media’ outlets this morning are talking about this being a “risk management” issue. Nonsense. This is a trust issue and Corzine is a former Goldman guy and the former governor of New Jersey.”

“But this much we do know: This is not an issue of a firm that allegedly broke every rule in the book when it comes to the sanctity of customer funds. Rather it is a story of utterly failed regulation and oversight that continues four years after the collapse that initiated in 2007. It is the story of willful and intentional blindness by our government and the instrumentalities within it that are supposed to prevent this sort of crap from happening.”

“Let us remember that MF Global was just added to the primary dealer list in 2010! The bankruptcy does raise questions, however, about how the Fed picks the primary dealers — especially since MF Global was one of four firms added to the ranks after new, more stringent requirements were put in effect in 2010.”

“I have to ask: Was that a political addition and where in the hell were the examiners that are supposed to be paying attention to what these firms are doing? If this is the result of “more-stringent” requirements can someone tell me why I should believe that any of the other Primary Dealers are in fact solvent and why I should not believe that they’re all doing the same thing?”

“This is the continuing story, as I lay out in Leverage, of “two worlds” where one has the rule of law (you and I) enforced, where robbing a bank gets you a nice long prison sentence and some cops looking for bank robbers to stop them while in the other, inhabited by politically-connected and powerful men and women you can pretty much do anything you damn well please and nothing happens to you — in fact, you get rewarded with calls from The President of the United States and pick the pockets of the public with essential impunity.”

“There are no checks and balances and the banksters wield their briefcases like John Dillinger wielded his tommy gun. There has been no reform since 2008. Dodd-Frank was a joke, Glass-Steagall was not put back in place, and there was no prosecution of those who did wrong.

SEVENTEEN PAGES IN GLASS-STEAGALL – 17 PAGES – KEPT THE BANKING SYSTEM SAFE FOR FIFTY YEARS.

And now we have another collapse that appears to show that there is no regulation, there is no oversight and nobody in the government gives a damn when one of the primary dealers that the government charges with making an orderly market in Treasuries appears to have co-mingled more than half a billion in customer funds with their own trading book.”

Full Story: Can You Survive It Being Over? (TheMarketTicker)

Amazingly, the media has been parroting as to how MF Global proves that the Frank-Dodd bill actually worked!

(Mish) “In spite of that background, (or do I mean because of it), MF Global thought Corzine was a perfect fit. Indeed, those looking for reckless behavior, massive risk taking, and willingness to bet the farm on marriage, in politics, and in life, Corzine represented rare ‘impossible to pass up’ talent.”

Full Story: Regulators Investigate MF Global for Missing Customer Money; MF Global Goes Bankrupt Before Making 1st Interest Payment; Corzine’s Achievement Sheet (Mish)

(Bloomberg) “The Volcker rule, as written in the Dodd Frank Act, had ‘so many different exemptions and exceptions and loopholes that it almost became nearly impossible for the regulators to fashion a rule that can live up to its original intent,’ said Barofsky, a Bloomberg Television contributing editor.”

Full Story: MF Exposes Risk Volcker Wants to Curb (Bloomberg)

EuroZone ESM “Treaty of Debt” can act with full impunity above all other EU laws?

Alexander P Morris — Mon, 31 Oct 2011 02:13:29 +0000

If this is accurate, it’s pretty frightening stuff, right along the lines of complete “New World Order” totalitarian domination over all of Europe. Open to hearing any thoughts to the contrary…

(abgeordneten) “EU: Treaty of debt (ESM) – stop it now!” Deputies on Check.de – The EU is threatening to transfer a debt-based Union of turning a liability community. In addition, the fiscal and budgetary powers of national parliaments will be given to an EU-Governors. This is based on the only recently become known to the draft treaty called “European Stability Mechanism (ESM)”, decide on the members of the German Bundestag probably after the summer break of 2011. German tax money to answer for the debt policies of other EU countries. We should work to make the banks any losses. The taxpayer is prescribed compulsory solidarity. The banks are on a voluntary basis here. The citizens of this free will not to admit you. We have to pay. The ESM contract can not therefore pass through the German Parliament”

Key Details of ESM Accord

Article 8 says “Authorized Capital stock 700 billion Euros”
Article 9 says “ESM members irrevocably and unconditionally undertake to pay capital calls on them within 7 days”
Article 10 allows the ESM board of governors to “change the authorized capital and amend article 8 accordingly”
Article 27 says ESM shall enjoy “immunity from every form of judicial process”. Thus the ESM can sue member countries but no one can challenge it. No governments, parliament or any other body or laws apply to the ESM or its organization.
Article 30 says “Governors, alternate governors, directors, alternate directors, the managing director and staff shall be immune from legal process with respect to acts performed by them (…) and shall enjoy inviolability in respect of their official papers and documents”

Site Link: Initiative Stoppt EU-Schuldenunion (ESM-Vertrag)!

(Mish) “There are no independent reviewers and no existing laws apply. Thus Europe’s national budgets will be in the hands of one single, unelected body that is accountable to no one and immune from all legal actions. Is this the future of the EU or will the German supreme court and other governments put an end to it?”

Full Story: Treaty of Debt – An Eye Opening Video on the ESM Bailout Mechanism (Mish)

(Mish) “Klaus Regling, head of the European Financial Stability Facility has proposed European Bailout Fund Could ‘One Day’ Issue Bonds in Yuan. Financial Suicide – Issuing bonds in another currency risks financial suicide. Currency movements add to the already massive potential risk of huge fluctuations because of leverage. Argentina blew up when it could no longer hold a peg in US dollars. While not a peg, imagine the losses on long-term bonds on a leveraged fund were the Yuan to rise by 33% vs. the Euro.”

Full Story: Financial Suicide: Head of EFSF says Bailout Fund Could One Day Issue Bonds in Yuan (Mish)

Bullish Sentiment Reaches Highest Level Since April

Alexander P Morris — Mon, 31 Oct 2011 01:39:01 +0000

(RobertSinn) “Notice that bullish sentiment in the AAII survey tends to serve as a leading indicator, however, it should be noted that the last time bearish sentiment was as low as it is now the S&P 500 ($SPY) suffered a 4-5% pullback in mid-July..”

“I can honestly state that one of my biggest mistakes during the past month was not paying enough attention to the record low net long exposure of hedge funds and the record bearish sentiment of active managers as seen below..”

“Sentiment is just one tool among many in a market participant’s arsenal, however, it increases in importance at market extremes/inflection points..”

Full Story: Bullish Sentiment Reaches Highest Level Since April (RobertSinn)

Other sentiment readings to keep an eye on include COT (Commitment of Traders) exposure – where Large Speculators (ie. hedge funds). I’ve often noticed that when Large Speculators on the COT reports are heavily bullishly or bearishly positioned, it tends to lead to sharp reversals in the not-to-distant future. Last year’s Euro crisis was another great example of this.

One more great site for Daily Sentiment Data is Market Harmonics. They offer free proprietary NASDAQ Daily Sentiment Index, Rydex Nova/Ursa Sentiment Indicator (S&P 500 Sentiment), and Option Buyers Sentiment Gauge (OBSG) charts, to name just a few.

NY Hard Assets Conference Review 2009