So much for my triple-top theory.
With the Dow putting on gains to close out the week - finishing at new highs for the 8th consecutive week - the world's most watched index is now at 18-month highs, leaving the memories of Lehman Bros., TARP and the painful housing crisis far behind in the memory hole.
But while stocks and traders are rejoicing over their riches, they fail to see, or even understand, the devastation caused by kicking 2 million families out of their homes or 8 million (probably more) out of jobs. Wall Street pros have stars on their foreheads and in their eyes. They obviously do not share the same values as most middle-class Americans.
The rally which began on March 10, 2009 has now reached extraordinary status. It is a full 12 1/2 months old, and the percentage gains off the bottom are simply spectacular.
Let's Recap:
The following are the March 9, 2009 lows, then today's closing prices, followed by the percentage gains.
Dow... 6,547.05 ... 11,204.28 ... +71,13%
S&P 500... 676.53 ... 1,217.28 ... +79.93
NASDAQ... 1,268.64 ... 2,530.15 ... +99.44
NYSE Comp. ... 4,226.31 ... 7,701.61 ... +82.23
There you have it. All anyone had to really do to turn $10,000 into roughly $18,000 over the course of the past 13 months was to buy all the stocks in any index and let it ride. For the rich and powerful, such as the lead traders at Goldman Sachs, the trick was to turn $1 billion or $10 billion into $1.8 billion or $18 billion. Being even more sophisticated, they probably had returns which far outstripped those of the entire indices.
Is there any wonder how the biggest frauds and thieves eve to walk the face of the earth (the leaders of Citigroup, Bank of America, Goldman Sachs, et. al.) were all able to pay back the government's (read: taxpayers) TARP money within a year's time?
Not only did the financial calamity which took the stock market down in the Fall of 2008 through the Winter of 2009 appear to be contrived and driven by the same people who created it, so too the "miraculous" recovery of stocks overall, and their very own firms, to boot.
On March 9, 2009, Bank of America (BAC) closed at 3.74. Citigroup (C) finished the session at 1.05; Goldman Sachs (GS), 73.28; Morgan Stanley (MS), 16.34; JP Morgan Chase (JPM), 15.79; Wells Fargo (WFC), 9.89 (actually closed at 8.06 on March 5).
Today, Bank of America finished the session at 18.43; Citigroup, 4.86; Goldman Sachs, 157.40; Morgan Stanley, 31.94; JP Morgan Chase, 44.94; and Wells Fargo, 33.48.
These are the five largest private sector financial institutions in the country. They've all done exceedingly well over the past 13 months, mostly at the expense of foreclosed-upon homeowners, people strung out on credit cards carrying rates that used to be called usury and millions of unemployed workers who lost their jobs because these bankers and traders convinced most of corporate America that the sky was falling. That the crisis occurred at the very end of the Bush administration's reign of terror was no coincidence. It was easily the greatest crime of all time.
All of these firms ruthlessly cut their dividend payouts to shreds at the height of the crisis and are still paying out less than 1% each. Citigroup pays no dividend. Goldman Sachs is the most generous, at 0.90%, at a time in which they paid their employees 43% of profits. These guys never learned to share.
Wall Street has changed dramatically from the days in which prices were quoted in eighths and sixteenths. Today's "titans" need billions of dollars to fill up their coffers in the highly rigged game of liar's poker. As a market observer - and sometimes participant - of over 35 years, I can safely say I have never seen a crash nor a rally quite as spectacular as the ones witnessed over the past 19 months. And, as the saying goes, "if it looks to good to be true, it probably isn't."
I don't know where this rally will end, or how, but it will, I imagine. Maybe it won't. Maybe the "masters of the universe" will keep stocks on a permanent upward slope in order to capture even more of the world's money supply. After all, government's just keep printing the stuff, so the bankers and frauds have to use up more of it, don't they?
I've been out of this market since December of 2009 and won't venture back in until I see some of these companies' CEOs in leg irons, which means I've probably already made my last investment in equities. I consider the current regime of manipulators and skimmers to be nothing better than common crooks. Having already stolen much of America's private wealth, they're no doubt scheming to steal the rest. At the risk of sounding like a curmudgeon, I'll keep the reporting in this same vein.
Wall Street is the biggest fraud most of us will ever see. enjoy it while it lasts.
Dow 11,204.28 69.99 (0.63%)
NASDAQ 2,530.15 11.08 (0.44%)
S&P 500 1,217.28 8.61 (0.71%)
NYSE Compos 7,701.61 58.78 (0.77%)
Advancers led decliners by a wide margin, 4406-2097. So too, new highs, all 1130 of them, crushed the 68 new lows. Volume was slimmed down from the levels earlier in the week.
NYSE Volume 5,888,237,000.00
NASDAQ Volume 2,434,851,250.00
Oil gained $1.42, to $85.12. Gold gained $10.80, to $1,153.10. Silver was higher by 18 cents, finishing at $18.19.
Everything went up today except your paycheck. Seriously, working has become the toil of suckers. If the "retirement investments" aren't wiped out by the frauds of finance, the taxman will take whatever else there is.
Good grief. Good luck.
Friday, April 23, 2010
Thursday, April 22, 2010
When Will the Music Stop, the Fraud End?
Following yesterday's post about Goldman Sachs, Greece and the intra-day triple top on the Dow, my midday work routine was broken by a screaming message from the ether: "Dow down 100 points in early trading!"
Being ever skeptical of my prognosticating prowess, I triple-clicked over to Yahoo! Finance (seriously, who puts an exclamation point after their corporate name? Wal-Mart!, Cisco!, Paris Hilton!) to confirm that stocks had already begun their ascent from the morning's depths. Surely, the short-covering and naked buying by all the Goldman traders was underway. By the time the market had closed, my best suspicions were confirmed, with the Dow finishing on the green side of the ledger, along with the S&P and a nifty gain on the NAZ.
Today's rally, as part of the endless rally that has become Wall Street in the post-crisis, pre-Goldman-settlement era, is about as plausible as 2007 California real estate prices. It's all part of the game, which, to my mind, only Robert Prechter (Elliott Wave) has figured out. Well, and me. Goldman moves the market, no doubt about it. They've been doing it since 1988 with ample assistance from the Plunge Protection Team and tacit approval from the upper crusters in DC.
Stocks can only go down when the powers that be wish them to do so. So it is written in the Book of Sachs. Fundamentals don't matter, p/e doesn't matter, all that matters is where the herd will head for feeding, following the hidden hand signals from the leader of the pack, clandestinely dictating market direction via sham trades, public bogus recommendations (remember Goldman's call for $200/barrel oil?) and equally dubious upgrades and downgrades.
Dow 11,134.29, +9.37 (0.08%)
NASDAQ 2,519.07, +14.46 (0.58%)
S&P 500 1,208.67, +2.74 (0.23%)
NYSE Composite 7,642.83, -1.84 (0.02%)
Advancing issues beat back decliners, 4085-2402, while new highs registered 867, to just 59 new lows. My occasional warning to ignore the new highs-lows divergence until at least June, as last year's fall and rise will produce a considerable amount of skew in those figures. Volume was again trending toward the upper end, which is reasonable considering the amount of trading that had to be undertaken to move the whole market higher.
NYSE Volume 6,682,984,000.00
NASDAQ Volume 2,727,952,500.00
What probably scared investors even more than bad news on the Greece front, and rightfully so, was the weekly initial unemployment claims figures issued at 8:30 am. Those came in at 456,000, below last week's unsightly 480,000, but still too high most most realists to stomach. Those figures must come down to around 300,000 weekly before anyone will speak "recovery" again.
But the chances of the unemployment figures falling soon seem slim, especially since congress passed an $18 billion extension last week that proffers "99 weekly unemployment checks averaging $335 to people whose 26 weeks of state-paid benefits have run out."
Yikes! That's two years worth of unemployment checks, or an average of just under $33,500 over the 99-week span, which is more than some people make actually working for a living. The government seems to be suggesting a longer-term unemployment lag than even most economists. Remember, employment is a lagging indicator, currently 9 months behind the official "end" of the recession.
Of course, Wall Street would rather most Americans believe the economy is continuing to improve, even while you're collecting unemployment checks and waiting for the bank to foreclose on your home. According to the elitists in our nation's capitol, it's all good.
Next they'll be selling us bridges... to nowhere, no doubt.
The underground economy is thriving on welfare, food stamps, unemployment and SS checks on a certain road to ruin.
Being ever skeptical of my prognosticating prowess, I triple-clicked over to Yahoo! Finance (seriously, who puts an exclamation point after their corporate name? Wal-Mart!, Cisco!, Paris Hilton!) to confirm that stocks had already begun their ascent from the morning's depths. Surely, the short-covering and naked buying by all the Goldman traders was underway. By the time the market had closed, my best suspicions were confirmed, with the Dow finishing on the green side of the ledger, along with the S&P and a nifty gain on the NAZ.
Today's rally, as part of the endless rally that has become Wall Street in the post-crisis, pre-Goldman-settlement era, is about as plausible as 2007 California real estate prices. It's all part of the game, which, to my mind, only Robert Prechter (Elliott Wave) has figured out. Well, and me. Goldman moves the market, no doubt about it. They've been doing it since 1988 with ample assistance from the Plunge Protection Team and tacit approval from the upper crusters in DC.
Stocks can only go down when the powers that be wish them to do so. So it is written in the Book of Sachs. Fundamentals don't matter, p/e doesn't matter, all that matters is where the herd will head for feeding, following the hidden hand signals from the leader of the pack, clandestinely dictating market direction via sham trades, public bogus recommendations (remember Goldman's call for $200/barrel oil?) and equally dubious upgrades and downgrades.
Dow 11,134.29, +9.37 (0.08%)
NASDAQ 2,519.07, +14.46 (0.58%)
S&P 500 1,208.67, +2.74 (0.23%)
NYSE Composite 7,642.83, -1.84 (0.02%)
Advancing issues beat back decliners, 4085-2402, while new highs registered 867, to just 59 new lows. My occasional warning to ignore the new highs-lows divergence until at least June, as last year's fall and rise will produce a considerable amount of skew in those figures. Volume was again trending toward the upper end, which is reasonable considering the amount of trading that had to be undertaken to move the whole market higher.
NYSE Volume 6,682,984,000.00
NASDAQ Volume 2,727,952,500.00
What probably scared investors even more than bad news on the Greece front, and rightfully so, was the weekly initial unemployment claims figures issued at 8:30 am. Those came in at 456,000, below last week's unsightly 480,000, but still too high most most realists to stomach. Those figures must come down to around 300,000 weekly before anyone will speak "recovery" again.
But the chances of the unemployment figures falling soon seem slim, especially since congress passed an $18 billion extension last week that proffers "99 weekly unemployment checks averaging $335 to people whose 26 weeks of state-paid benefits have run out."
Yikes! That's two years worth of unemployment checks, or an average of just under $33,500 over the 99-week span, which is more than some people make actually working for a living. The government seems to be suggesting a longer-term unemployment lag than even most economists. Remember, employment is a lagging indicator, currently 9 months behind the official "end" of the recession.
Of course, Wall Street would rather most Americans believe the economy is continuing to improve, even while you're collecting unemployment checks and waiting for the bank to foreclose on your home. According to the elitists in our nation's capitol, it's all good.
Next they'll be selling us bridges... to nowhere, no doubt.
The underground economy is thriving on welfare, food stamps, unemployment and SS checks on a certain road to ruin.
Wednesday, April 21, 2010
Triple Top or More Room to Roam?
Stocks just keep bounding up and down, but mostly up, though the activity since Thursday of last week (April 15) is suggesting that the top may be already set, or set up.
The Dow hit an intra-day high of 11,190.22 on Tuesday, after making stops at 11,189.61 on Thursday (4/15) and 11,186.82 on Friday (4/16). That appears to be the formation of some fairly significant resistance, especially considering today's close of 11,124.92, well below those lofty levels.
It's far too early to tell if that the 11,190 area will actually be the top, though the Transportation Index is signaling somewhat the same signs of waning interest, settling today some 124 points below its own intra-day high from April 15. Of course, more bad news for either Greece or Goldman Sachs will send the stock-pumping moles in the PPT scurrying into action with their billions of dollars of untraceable trades to keep stocks soaring and the public none the wiser.
If one is inclined to listen to financial news via the mainstream media (re: CNBC), the constant howling over "improving conditions", "V-shaped recovery" and similar bombast can be deafening, but make no doubt, dirty little secrets are being kept far from public view.
In that regard, the SC charges against Goldman Sachs are probably more of a decoy than anything else. If something critical were to occur - and break the collusion between the federal government and Wall Street - the Department of Justice would have filed criminal charges. The chances of anything like that actually happening are remote, though those of us who believe that the housing bubble and subsequent crash, bailouts and breakdowns were indeed high crimes remain hopeful.
Beating back the onrushing forces of government and big money at the same time is an uphill fight, one the American people seem ill-inclined to undertake. Tea parties have been largely a ploy of the right wing, do-nothing Republican party, which sees obstruction as a perfectly good alternative to actually legislating on the behalf of the American people.
Those days are long gone, and the folks occupying the high offices in Washington and Wall Street hope they will be soon forgotten as well. Politicians listen only for the sound of crisp bils being peeled off of large wads from well-heeled supporters, like oil companies, pharmas and banking interests. Nobody will go to jail after the banks literally stole billions of dollars in real estate assets through phony documentation, phony appraisals, phony credit reports and phony income statements.
The wizards of Wall Street are truthfully not wizards of high finance at all, but rather, masters of finagling every last dollar out of the pockets of the middle class. To them, working men and women are rabble, peons to be fleeced by their powerful financial acumen and lengthy over-worded documents. The government complies by not regulating and the courts further the fraud by failing to prosecute even when they have good actions with solid arguments in front of them.
Witness Federal Court Judge Virginia Phillips dismissing 8 separate class actions on the same pretext: that the banks and builders weren't responsible for the calamity which has put millions out of their homes, but that the "economy" or the "recession" was to blame. With judges like Phillips front-running litigation for the bank fraudsters, is there really any reason to believe in democratic principles like justice, fairness, or even due process any more?
The obvious answer is no, and that bodes ill for all of us, present and future. Baby boomers should face facts: our parents were probably the most prosperous generation ever in America, but we are less fortunate, with every excess dollar seemingly earmarked for either utility rate hikes, tax increases or supplements to the wildly out-of-control and under-funded entitlement programs. The baby-boomer generation will be lucky to retire with any kind of benefits, as the Social Security fund is already running current-account deficits. The government will have to either borrow or tax to pay the millions who will be retiring in the next decade, and borrow in enormous sums.
In the meantime, Americans mostly continue to work and try to save, though for many, that has become an increasingly difficult task. Unemployment is expected to remain stubbornly high for at least another three years, with 8% now being hailed as a benchmark, though in reality, the current 9.7% rate is actually closer to 18% when all the conditional arguments are removed from the government's calculations.
Wall Street could care less, though their rapacious greed could turn out to be their own worst enemy. Without a spending public, many of the major enterprises will crumble for lack of new suckers (funding). It cannot happen too soon, for only then will there be a reckoning and justice for all.
Dow 11,124.92, +7.86 (0.07%)
NASDAQ 2,504.61, +4.30 (0.17%)
S&P 500 1,205.93, -1.24 (0.10%)
NYSE Composite 7,644.67, -24.44 (0.32%)
Once again, the indices rendered a split decision, with two up and two down, indicating that a turn is approaching. Advancing issues led decliners, 3534-2957. 767 new highs overshadowed the mere 47 new lows. Volume was back up again, though it's likely due more to position trades than anything else, i.e., keeping the markets on an even keel by manipulating a range of stocks.
NYSE Volume 6,301,928,500
NASDAQ Volume 2,644,937,250
Oil was down, gold and silver, up, all three stuck in trading ranges they have occupies for months. Those prices are deliberately being manipulated to keep order in the global economy. Central banks fear gold because their currencies are backed by nothing but empty promises, and the oil sheiks and oligopolies can maintain production without social unrest at abysmally high prices.
Its a sad world condition, in which the rich now control a larger concentration of wealth than at any other time in history, except for maybe the Middle Ages or the Roman Empire.
The Dow hit an intra-day high of 11,190.22 on Tuesday, after making stops at 11,189.61 on Thursday (4/15) and 11,186.82 on Friday (4/16). That appears to be the formation of some fairly significant resistance, especially considering today's close of 11,124.92, well below those lofty levels.
It's far too early to tell if that the 11,190 area will actually be the top, though the Transportation Index is signaling somewhat the same signs of waning interest, settling today some 124 points below its own intra-day high from April 15. Of course, more bad news for either Greece or Goldman Sachs will send the stock-pumping moles in the PPT scurrying into action with their billions of dollars of untraceable trades to keep stocks soaring and the public none the wiser.
If one is inclined to listen to financial news via the mainstream media (re: CNBC), the constant howling over "improving conditions", "V-shaped recovery" and similar bombast can be deafening, but make no doubt, dirty little secrets are being kept far from public view.
In that regard, the SC charges against Goldman Sachs are probably more of a decoy than anything else. If something critical were to occur - and break the collusion between the federal government and Wall Street - the Department of Justice would have filed criminal charges. The chances of anything like that actually happening are remote, though those of us who believe that the housing bubble and subsequent crash, bailouts and breakdowns were indeed high crimes remain hopeful.
Beating back the onrushing forces of government and big money at the same time is an uphill fight, one the American people seem ill-inclined to undertake. Tea parties have been largely a ploy of the right wing, do-nothing Republican party, which sees obstruction as a perfectly good alternative to actually legislating on the behalf of the American people.
Those days are long gone, and the folks occupying the high offices in Washington and Wall Street hope they will be soon forgotten as well. Politicians listen only for the sound of crisp bils being peeled off of large wads from well-heeled supporters, like oil companies, pharmas and banking interests. Nobody will go to jail after the banks literally stole billions of dollars in real estate assets through phony documentation, phony appraisals, phony credit reports and phony income statements.
The wizards of Wall Street are truthfully not wizards of high finance at all, but rather, masters of finagling every last dollar out of the pockets of the middle class. To them, working men and women are rabble, peons to be fleeced by their powerful financial acumen and lengthy over-worded documents. The government complies by not regulating and the courts further the fraud by failing to prosecute even when they have good actions with solid arguments in front of them.
Witness Federal Court Judge Virginia Phillips dismissing 8 separate class actions on the same pretext: that the banks and builders weren't responsible for the calamity which has put millions out of their homes, but that the "economy" or the "recession" was to blame. With judges like Phillips front-running litigation for the bank fraudsters, is there really any reason to believe in democratic principles like justice, fairness, or even due process any more?
The obvious answer is no, and that bodes ill for all of us, present and future. Baby boomers should face facts: our parents were probably the most prosperous generation ever in America, but we are less fortunate, with every excess dollar seemingly earmarked for either utility rate hikes, tax increases or supplements to the wildly out-of-control and under-funded entitlement programs. The baby-boomer generation will be lucky to retire with any kind of benefits, as the Social Security fund is already running current-account deficits. The government will have to either borrow or tax to pay the millions who will be retiring in the next decade, and borrow in enormous sums.
In the meantime, Americans mostly continue to work and try to save, though for many, that has become an increasingly difficult task. Unemployment is expected to remain stubbornly high for at least another three years, with 8% now being hailed as a benchmark, though in reality, the current 9.7% rate is actually closer to 18% when all the conditional arguments are removed from the government's calculations.
Wall Street could care less, though their rapacious greed could turn out to be their own worst enemy. Without a spending public, many of the major enterprises will crumble for lack of new suckers (funding). It cannot happen too soon, for only then will there be a reckoning and justice for all.
Dow 11,124.92, +7.86 (0.07%)
NASDAQ 2,504.61, +4.30 (0.17%)
S&P 500 1,205.93, -1.24 (0.10%)
NYSE Composite 7,644.67, -24.44 (0.32%)
Once again, the indices rendered a split decision, with two up and two down, indicating that a turn is approaching. Advancing issues led decliners, 3534-2957. 767 new highs overshadowed the mere 47 new lows. Volume was back up again, though it's likely due more to position trades than anything else, i.e., keeping the markets on an even keel by manipulating a range of stocks.
NYSE Volume 6,301,928,500
NASDAQ Volume 2,644,937,250
Oil was down, gold and silver, up, all three stuck in trading ranges they have occupies for months. Those prices are deliberately being manipulated to keep order in the global economy. Central banks fear gold because their currencies are backed by nothing but empty promises, and the oil sheiks and oligopolies can maintain production without social unrest at abysmally high prices.
Its a sad world condition, in which the rich now control a larger concentration of wealth than at any other time in history, except for maybe the Middle Ages or the Roman Empire.
Tuesday, April 20, 2010
Interested Parties: You, Me and AIG Want Goldman Sachs Money
Recent fraud charges brought by the SEC against Goldman Sachs have brought into focus much of what went wrong in the financial meltdown of 2008.
A shorthand view of the cataclysmic months of September and October, 2008, involve the collapse of Lehman Bros., and extenuating circumstances stemming from unpaid bets against CDOs sold by many of the major US banking interests - Goldman, Bank of America (Countrywide), Citigroup, Wells Fargo (Wachovia). Those bets (call it betting against the line or insurance) were in the form of Credit Default Swaps mostly in the hands of AIG, which went bust to the tune of about $180 billion.
The government stepped in and paid off many of the counterparties, including Goldman Sachs, BofA, and many others, most of them getting 100 cents on the dollar.
With fraud being alleged, plaintiff's attorneys literally around the world are looking into suing Goldman on behalf of clients ranging from small towns to large pension funds to AIG itself. An AIG action would cause considerable consternation for Goldman and its CEO, Lloyd Blankfein, to say nothing of potential monetary damages.
Further down the food chain are millions of US homeowners who may have been swindled by unscrupulous mortgage brokers and the banks themselves. Everybody was writing mortgages, and anyone with a pulse was the qualifying criteria. While the big banks may square off for millions and billions of dollars, a deluge of class action and individual suits could overwhelm already burdened court systems across the country.
Homeowners were taken for various rides with interest only loans, balloon loans, Alt-A's and other variable-rate vehicles, the primary fraudulent factors being almost always the same: inflated incomes on top of inflated appraisals. The volume of loans meeting the fraud standards could run as high as 70% of all loans written between 2003 and 2007, when the sub-prime market reached its climax and then began to quickly deflate.
Naturally, these court cases could run on for years, but the potential litigation fees for adept attorneys could be astronomical. Suing anything and anybody related to the the mortgage or securities industry appears to be a growth sector for the economy, with high hopes to recoup either money or real estate as the eventual goal.
With all that as background, Wall Street will likely remain in a relatively cautious mode, especially once earnings season passes in two weeks. Without a catalyst to move stocks higher, the potential for financial disaster rears its ugly head again and could spook many traders who already aren't overwhelmed with love for the workings of Wall Street.
Stocks pushed ahead again on Tuesday, though there wasn't much lift to the effort, especially concerning Dow stocks. Once again, Goldman Sachs' trading desks were likely underpinning the whole market, keeping the coast clear for Blankfein, et. al.. Volume was decidedly lower than the previous two sessions, an indication that some degree of normalcy has returned, though what normal is in these turbulent times is anybody's guess.
Dow 11,117.06, +25.01 (0.23%)
NASDAQ 2,500.31, +20.20 (0.81%)
S&P 500 1,207.17, +9.65 (0.81%)
NYSE Composite 7,669.11, +72.55 (0.96%)
Gainers beat back losers by a healthy margin, 5102-1418. There were 539 new highs to just 29 new lows.
NYSE Volume 5,797,391,000
NASDAQ Volume 2,006,695,375
Commodities rebounded smartly, with oil gaining $2.00, to $83.45. Gold was up $3.40, to $1,138.60, and silver added 9 cents to $17.82.
The SEC-Goldman Sachs saga is still in the prelude. It's almost a certainty that fireworks will develop out of this singular action, leading to more lawsuits using the SEC's action as a basis for argument. Already, an Italian bank is suing Citigroup, alleging misrepresentation on a complex swap arrangement.
Stay tuned. There's more to come.
A shorthand view of the cataclysmic months of September and October, 2008, involve the collapse of Lehman Bros., and extenuating circumstances stemming from unpaid bets against CDOs sold by many of the major US banking interests - Goldman, Bank of America (Countrywide), Citigroup, Wells Fargo (Wachovia). Those bets (call it betting against the line or insurance) were in the form of Credit Default Swaps mostly in the hands of AIG, which went bust to the tune of about $180 billion.
The government stepped in and paid off many of the counterparties, including Goldman Sachs, BofA, and many others, most of them getting 100 cents on the dollar.
With fraud being alleged, plaintiff's attorneys literally around the world are looking into suing Goldman on behalf of clients ranging from small towns to large pension funds to AIG itself. An AIG action would cause considerable consternation for Goldman and its CEO, Lloyd Blankfein, to say nothing of potential monetary damages.
Further down the food chain are millions of US homeowners who may have been swindled by unscrupulous mortgage brokers and the banks themselves. Everybody was writing mortgages, and anyone with a pulse was the qualifying criteria. While the big banks may square off for millions and billions of dollars, a deluge of class action and individual suits could overwhelm already burdened court systems across the country.
Homeowners were taken for various rides with interest only loans, balloon loans, Alt-A's and other variable-rate vehicles, the primary fraudulent factors being almost always the same: inflated incomes on top of inflated appraisals. The volume of loans meeting the fraud standards could run as high as 70% of all loans written between 2003 and 2007, when the sub-prime market reached its climax and then began to quickly deflate.
Naturally, these court cases could run on for years, but the potential litigation fees for adept attorneys could be astronomical. Suing anything and anybody related to the the mortgage or securities industry appears to be a growth sector for the economy, with high hopes to recoup either money or real estate as the eventual goal.
With all that as background, Wall Street will likely remain in a relatively cautious mode, especially once earnings season passes in two weeks. Without a catalyst to move stocks higher, the potential for financial disaster rears its ugly head again and could spook many traders who already aren't overwhelmed with love for the workings of Wall Street.
Stocks pushed ahead again on Tuesday, though there wasn't much lift to the effort, especially concerning Dow stocks. Once again, Goldman Sachs' trading desks were likely underpinning the whole market, keeping the coast clear for Blankfein, et. al.. Volume was decidedly lower than the previous two sessions, an indication that some degree of normalcy has returned, though what normal is in these turbulent times is anybody's guess.
Dow 11,117.06, +25.01 (0.23%)
NASDAQ 2,500.31, +20.20 (0.81%)
S&P 500 1,207.17, +9.65 (0.81%)
NYSE Composite 7,669.11, +72.55 (0.96%)
Gainers beat back losers by a healthy margin, 5102-1418. There were 539 new highs to just 29 new lows.
NYSE Volume 5,797,391,000
NASDAQ Volume 2,006,695,375
Commodities rebounded smartly, with oil gaining $2.00, to $83.45. Gold was up $3.40, to $1,138.60, and silver added 9 cents to $17.82.
The SEC-Goldman Sachs saga is still in the prelude. It's almost a certainty that fireworks will develop out of this singular action, leading to more lawsuits using the SEC's action as a basis for argument. Already, an Italian bank is suing Citigroup, alleging misrepresentation on a complex swap arrangement.
Stay tuned. There's more to come.
Monday, April 19, 2010
Goldman Sachs' Power on Display; Blankfien Should Be Jailed
Make no doubt about it. The only reason stocks gained today was because the traders at Goldman Sachs were boosting prices, especially for their own stock and others in the banking sector.
One must really have to stretch credulity to its most outer limits to believe that actual investors - real people playing with their own money - would have so much as touched financial shares with as many ten-foot poles as one could offer them.
Today's argument was that the SEC decision to bring fraud charges against Goldman Sachs came down to a 3-2 vote, thus, the charges cannot be well-founded. While that may be so, and well and good, the argument is as superfluous as what little hair remains on Goldman CEO Lloyd Blankfein's (left) head. There's something there, surely, but it has no meaning.
Looking at the larger scheme, suppose Goldman Sachs is completely innocent, all the way down the line. They did nothing wrong throughout the period from 2003-2007, in which trillions of dollars were packaged, sold and then vaporized. Suppose that is true.
If that's the case, then why would anyone do business with the most incompetent firm on the planet? They must not have known that housing values should not rise by 15% a year, that loans for mortgages should be closely scrutinized and offered only to potential borrowers with the highest credit standards and ability to pay.
Truly, if the chiefs at the Goldman Sachs roundtable didn't see anything wrong with the deals they were facilitating, packaging and selling, then they must be the greatest buffoons on the planet.
The argument simply doesn't work, unless, of course, you are dealing with what actually may be the greatest gathering of idiots in the history of the world, the American public, who still might buy their story, though even that is doubtful.
Politics comes into play in the SEC, just as in any organization. The two dissenters on the decision to charge the firm with fraud might have been concerned over their futures. Goldman Sachs is an incredibly powerful organization, with tentacles throughout the government and society. Taking them on in the courts is a task not for the meek. The regulators who finally, after nearly two years of dawdling, mustered enough courage to do what is right, will likely become pariahs on Wall Street, as unwelcome as a sell rating by any analyst.
Thus, Goldman's political muscle must be weighed in this light, as well as in any trading while the matter is being litigated. Just as the control freaks at Goldman Sachs made sure today would be a shining moment for capitalism, they will be equally resolute in promoting a massive sell-off should the tide turn against them.
It's a simple argument once one boils out all of the politics and media spin: Goldman Sachs either committed fraud on a grand scale or they are completely incompetent and unfit to handle even the simplest financial transactions.
So it is that as of today, all trading in equities and commodities - Goldman's playgrounds - should be eyed with the highest degree of skepticism possible. The firm controls so much of the markets, to such an extraordinary degree, that they may not only be too big to fail, but too big to even be a fair, honest and practical participant.
Dow 11,092.05, +73.39 (0.67%)
NASDAQ 2,480.11, -1.15 (0.05%)
S&P 500 1,197.52, +5.39 (0.45%)
NYSE Composite 7,596.56, +11.94 (0.16%)
Offering credence to the "control" argument are the indices, today hopelessly out of kilter. While the Dow was up sharply, the NASDAQ was down, and the NYSE Composite barely registering a gain. Further, DECLINING ISSUES LED ADVANCERS, 3774-2621. New highs ebbed lower, to 259, while there were only 48 new lows. Volume was magnificent, especially on the NYSE, because it took a lot of trading to boost specific stocks (ones that were, in reality, being sold off by spooked investors).
NYSE Volume 7,341,836,000
NASDAQ Volume 2,163,046,500
This New York Times article about the loyal Goldman Sachs' employees rallying around their beleaguered company and their head honcho, Mr. Blankfein, speaks not only of the company's incredibly adroit reach into the media, but also of the levels of deceit they will employ to save themselves.
The game is up at Goldman, whether they like to admit it or not. Blankfein, if he pushes back hard enough, may find himself looking out at the world from behind bars, which is probably where he belongs, as do many of his cadre of overstuffed, self-important, greed merchants.
Oil prices fell for a third straight day, probably because the Goldman traders were too busy propping up the stock market. Oil slipped another $1.79, to $81.45. Gold fell $1.10, to $1,135.20. Silver gained 6 cents, to $17.72.
Goldman Sachs is still in control, for now, but if there is any justice remaining in what little is left of our democracy, they won't be for long. We can only hope that they don't blow up the economy for good as their final tribute to greed.
One must really have to stretch credulity to its most outer limits to believe that actual investors - real people playing with their own money - would have so much as touched financial shares with as many ten-foot poles as one could offer them.Today's argument was that the SEC decision to bring fraud charges against Goldman Sachs came down to a 3-2 vote, thus, the charges cannot be well-founded. While that may be so, and well and good, the argument is as superfluous as what little hair remains on Goldman CEO Lloyd Blankfein's (left) head. There's something there, surely, but it has no meaning.
Looking at the larger scheme, suppose Goldman Sachs is completely innocent, all the way down the line. They did nothing wrong throughout the period from 2003-2007, in which trillions of dollars were packaged, sold and then vaporized. Suppose that is true.
If that's the case, then why would anyone do business with the most incompetent firm on the planet? They must not have known that housing values should not rise by 15% a year, that loans for mortgages should be closely scrutinized and offered only to potential borrowers with the highest credit standards and ability to pay.
Truly, if the chiefs at the Goldman Sachs roundtable didn't see anything wrong with the deals they were facilitating, packaging and selling, then they must be the greatest buffoons on the planet.
The argument simply doesn't work, unless, of course, you are dealing with what actually may be the greatest gathering of idiots in the history of the world, the American public, who still might buy their story, though even that is doubtful.
Politics comes into play in the SEC, just as in any organization. The two dissenters on the decision to charge the firm with fraud might have been concerned over their futures. Goldman Sachs is an incredibly powerful organization, with tentacles throughout the government and society. Taking them on in the courts is a task not for the meek. The regulators who finally, after nearly two years of dawdling, mustered enough courage to do what is right, will likely become pariahs on Wall Street, as unwelcome as a sell rating by any analyst.
Thus, Goldman's political muscle must be weighed in this light, as well as in any trading while the matter is being litigated. Just as the control freaks at Goldman Sachs made sure today would be a shining moment for capitalism, they will be equally resolute in promoting a massive sell-off should the tide turn against them.
It's a simple argument once one boils out all of the politics and media spin: Goldman Sachs either committed fraud on a grand scale or they are completely incompetent and unfit to handle even the simplest financial transactions.
So it is that as of today, all trading in equities and commodities - Goldman's playgrounds - should be eyed with the highest degree of skepticism possible. The firm controls so much of the markets, to such an extraordinary degree, that they may not only be too big to fail, but too big to even be a fair, honest and practical participant.
Dow 11,092.05, +73.39 (0.67%)
NASDAQ 2,480.11, -1.15 (0.05%)
S&P 500 1,197.52, +5.39 (0.45%)
NYSE Composite 7,596.56, +11.94 (0.16%)
Offering credence to the "control" argument are the indices, today hopelessly out of kilter. While the Dow was up sharply, the NASDAQ was down, and the NYSE Composite barely registering a gain. Further, DECLINING ISSUES LED ADVANCERS, 3774-2621. New highs ebbed lower, to 259, while there were only 48 new lows. Volume was magnificent, especially on the NYSE, because it took a lot of trading to boost specific stocks (ones that were, in reality, being sold off by spooked investors).
NYSE Volume 7,341,836,000
NASDAQ Volume 2,163,046,500
This New York Times article about the loyal Goldman Sachs' employees rallying around their beleaguered company and their head honcho, Mr. Blankfein, speaks not only of the company's incredibly adroit reach into the media, but also of the levels of deceit they will employ to save themselves.
The game is up at Goldman, whether they like to admit it or not. Blankfein, if he pushes back hard enough, may find himself looking out at the world from behind bars, which is probably where he belongs, as do many of his cadre of overstuffed, self-important, greed merchants.
Oil prices fell for a third straight day, probably because the Goldman traders were too busy propping up the stock market. Oil slipped another $1.79, to $81.45. Gold fell $1.10, to $1,135.20. Silver gained 6 cents, to $17.72.
Goldman Sachs is still in control, for now, but if there is any justice remaining in what little is left of our democracy, they won't be for long. We can only hope that they don't blow up the economy for good as their final tribute to greed.
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