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lunar 24.11.2008 09:05

...noch mehr CITI :rolleyes

US Takes a $20 Billion Stake and Guarantees $306 Billion of Risky Loans for Citigroup

And the hits just keep on coming.

International Herald Tribune
U.S. to inject $20 billion into Citigroup

The Associated Press
Sunday, November 23, 2008

WASHINGTON: The U.S. government unveiled a plan Sunday to rescue Citigroup, including taking a $20 billion stake in the firm, whose stock has been hammered on worries about its financial health.

In addition, the government will guarantee as much as $306 billion of risky loans and securities backed by commercial and residential mortgages.

The announcement was made by the Treasury Department, the Federal Reserve and the Federal Deposit Insurance Corp.

Posted by Jesse at 12:32 AM

23 November 2008

Citigroup in Emergency Talks with Government for Cash

Here we are, behind financial lines, huddled over our shortwave radios, waiting to hear about the true state of of our economy from the BBC... LOL.

BBC News
Citigroup seeks 'emergency cash'
15:54 GMT, Sunday, 23 November 2008

Executives of Citigroup, one of the biggest banks in the US, are in emergency talks with the US Treasury to gain much-needed funding, reports say.

The bank is also said to have contacted certain shareholders to assess their interest in increasing their stakes as as it faces an uncertain future.

Citigroup stock ended 20% lower on Friday as its board members met.

Last week the company announced 52,000 job losses worldwide on top of 23,000 job cuts previously announced.

No one from Citigroup was immediately available for comment.

There are fears that without further funding the bank might not be able to survive. Any money would be in addition to the $25bn injection it received in October from the US Treasury.

Options being discussed included a government cash injection as well as Citigroup selling some of its business, reported The Sunday Times. (Remember you heard about all of this here first - Jesse)

Chief executive Vikram Pandit told employees on Friday that the firm did not want to change its business model, Reuters reported, citing two employees.

He also reiterated that the firm had a robust capital position. (That seems to be financial CEO-speak for "we are on the brink, mates, and its been good to know you "- Jesse)

But Sean Egan, analyst at ratings agency Egan-Jones Ratings, said, "Citigroup needs a deep-pocketed investor that is ready, willing, and able to step up in the next few days." (Prince Alwaleed has a hole in his pocket? - Jesse)

"The only one who comes to mind is the government," he said, adding that $50bn might ne needed. (ROFLMAO, you can't make this stuff up. Hmmm, I'm thinking of a bigger fool, and a bigger number.... - Jesse)

In a bid to reassure investors, Citigroup is running advertisements in US and international newspapers on Sunday underlining its stability. (NY global bank with gaping holes in balance sheet desparately seeking a deep-pocketed investor 'just in case' we wish to re-open on Monday - Jesse)

It is widely expected that Citigroup will issue a statement on Monday before the US markets open. (They just said they had a robust cash position and that everything was fine. What are they going to say now, that they expect a cash surge from the Bush Administration to turn the tide? - Jesse)

Posted by Jesse at 4:51 PM :verbeug

lunar 24.11.2008 09:11

Sun 23 Nov 2008

Oracle Puts Blankfein On The Ropes

Posted by alyx under goldman sachs
[4] Comments

I thought it would be an interesting exercise this morning to find something, anything, to suggest Citi’s Bandit made a good decision as of late. Found one, maybe. (I will admit to being surprised.)

When Goldman called Citi up after becoming a bank holding company and said plz plz buy us, and The Bandit laughed it off, he may have just saved Citi from bearing the brunt of the mother of all margin calls:
Shares of Warren Buffett’s insurance holding company are on the ropes this month, plunging 30% in part because the famed investor dabbled in an area of the market he has long publicly derided: derivatives. And due to a tangled web of financial relationships, they may be taking Goldman Sachs shares down with them. Investors are concerned about a $37-billion bet that Buffett made last year that U.S. and world equity values would be higher in 15 to 20 years than they were then, when the Dow Jones Industrials were trading around 13,000. Through his firm, Berkshire Hathaway, Buffett sold option contracts, known as “naked puts” to an undisclosed group of investors for around $4.85 billion, reportedly using Goldman as broker…

“Because of its solid-gold credit rating, Berkshire Hathaway was not required to put up collateral to make this trade. But now rumors are flying on Wall Street that the owners of the contracts have demanded that broker Goldman Sachs put up collateral for the rest of the amount due. Since the value of the trade could be enormous, the collateral demands are said to be large, and fears that Goldman will struggle to make good on its obligation has panicked shareholders. Indeed one theory making the rounds this week is that Buffett put $5 billion into Goldman at around $125 per share in September not as an investment but to help provide funds for the collateral.

(Emphasis from the original.)

Buffett - Mr. “Derivatives are weapons of mass destruction” - made a $37 bn derivatives bet? And GoldenSlacks didn’t ask for collateral, because the Oracle can do no wrong? I can’t question the wisdom of the actual bet, because most people would expect Dow > 13000 in 2028, but we’re not talking about 2028, we’re talking about nobody wanting to bear the risk now of such a forward-looking bet. No collateral on an open-ended bet with a downside of [edited] $37 bn? If only my name carried that kind of clout. I can’t even open a bar tab without coughing up a credit card.

While we’re at it, Caroline B sent me a link earlier this week about Lloyd Blankfein possibly getting caught with his shorts down, though naked shorting of loans is not (yet) illegal because until recently it was just not done. Expect some kind of regulations in this area now that GS has put it on the radar.

:kopf .....alles ein riesiger faulender Haufen :mad

...einer der Kommentare und Antwort:
  1. Chris Says:
    November 23rd, 2008 at 1:37 pm I’m not sure I understand the reasoning behind GS having to put up collateral against the Berkshire bet. If Berkshire defaults, is Goldman responsible for paying the bet?

    And even if that is the case, how could the counterparty require GS to post collateral that they couldn’t in turn force Berkshire to put up? If GS said “no” what would happen?

    Also, I disagree with the article’s assertion that this damages Berkshire’s or WB’s record. In the same vein, MSN keeps posting articles that refer to his investment into Goldman at $125 a share, when that isn’t WB’s investment at all. His preferreds are convertible at 125, but financial journalists continue to make his investment seem like its in common stock–which in turn has led some investors (read: fools) to try to ride his coattails and buy the common.

    The way that journalists (not you) bandy the Buffett/Berkshire name around at will is evidence of either a) their shameless self-promotion on the back of a famous investor and b) their utter lack of knowledge about WB’s investments (or willful disregard of them)
  2. alyx Says:
    November 23rd, 2008 at 2:09 pm My best guess is that the reason GS would have to put up the collateral at this point is because GS can’t ask Berkshire to pay up until the puts expire, bc otherwise Goldman could just ask Berkshire for the collateral now even though they didn’t initially. I suppose the contracts are mark-to-market and there must be a clause/rule that allows the holders to ask for collateral if the contracts are substantially underwater (which they obvs are right now). Hopefully more details will come out soon.

lunar 24.11.2008 10:08

Videos Nov 20/19 ---> Crisis of confidence - Reading the renminbi

lunar 24.11.2008 12:32

  • NOVEMBER 24, 2008
Builders Make Plea for Federal Aid

Critics Warn That Propping Up Housing Demand Will Only Prolong Market's Woes


Struggling U.S. auto makers left Washington empty-handed after weeks of pleading for a handout, but that hasn't deterred home builders from stepping up to lobby Congress for help.

But any federal assistance would require policy makers to figure out how to stimulate demand for housing -- the problem at the root of the global financial meltdown -- without artificially propping up home values.

The builders' lobby is ramping up its sales pitch for a $250 billion stimulus package called "Fix Housing First," arguing that financial markets won't recover until home prices stop falling. They are calling for a generous tax credit for home purchases and a federal subsidy that would lower a homeowner's mortgage rate.

Congress resisted a similar effort to pass a larger tax credit earlier this year, instead creating a $7,500 credit for new-home purchases that had to be paid back over 15 years, effectively extending an interest-free loan.....

full story:

lunar 24.11.2008 12:55

FEATURES MAIN Does Extreme Stress Signal an Economic Snapback?


More than a decade's worth of equity gains has evaporated. But history suggests that stocks won't fall much further.

NOT MANY PEOPLE ARE JUMPING OUT OF WINDOWS on Wall Street or selling apples on corners, but investors are getting a bitter taste of what happened in the aftermath of the 1929 market crash.

The brutal 2008 bear market deepened last week as the Dow industrials fell 451 points, or 5.3%, to 8,046, despite a sharp rally Friday that lifted the benchmark average 494 points. The S&P 500 slid 8.4%, to 800, amid deepening fear about the global economy and financial system. Citigroup tottered at week's end after it plunged 60% in the five sessions to just $3.77 a share.........

........FINANCIALS GOT WHACKED last week as Bank of America (BAC) declined 30%, to 11.47; Morgan Stanley (MS) was off 16%, to 10.05, and Goldman Sachs (GS) slid 20%, to 53.31. Morgan Stanley now trades at just 40% of its tangible book value of $26 a share, while Goldman fetches 64% of its tangible book of $82, after briefly falling below its 1999 IPO price of 53.

In the days when Goldman was a partnership, employees toiled for years to make partner and have the opportunity to get Goldman equity at book value. Now, any investor can buy into the company at a fraction of its stated net worth. Citigroup languishes at about half of its tangible book value. There are obvious risks in the financials, but it's rare for investors to be able to buy so many companies -- life insurers, property and casualty insurers, banks and brokers -- below book. Financials within the S&P 500 are down 67% this year.

It has been perilous to call a bottom in financials and the overall stock market this year, but history at least is encouraging.

lunar 24.11.2008 13:10

Skip to content

Anatomy of a Meltdown

Ben Bernanke and the financial crisis.

by John Cassidy December 1, 2008

Some are born radical. Some are made radical. And some have radicalism thrust upon them. That is the way with Ben Bernanke, as he struggles to rescue the American financial system from collapse. Early every morning, weekends included, Bernanke arrives at the headquarters of the Federal Reserve, an austere white marble pile on Constitution Avenue in Foggy Bottom. The Fed, which is as hushed inside as a mausoleum, is a place of establishment reserve. Its echoing hallways are lined with sombre paintings. The office occupied by Bernanke, a soft-spoken fifty-four-year-old former professor, has high ceilings, several shelves of economics textbooks, and, on the desk, a black Bloomberg terminal. On a shelf in a nearby closet sits a scruffy gym bag, which in calmer days Bernanke took to the Fed gym, where he played pickup basketball with his staffers....

full story:

lunar 24.11.2008 15:31

Fri Nov-21-08 07:13 PM

Original message Weekend Economists--The Nostalgia Weekend November 21-23, 2008

As the holidays approach, we reminisce about events and people long past who, through the dust and glow of history, look so much more lustrous now than they did then. We just didn't know how good we had it (well, those of us who have resisted, kicking and screaming, the gutting of America did know, we just couldn't get any leverage over the pirates). A lot of Americans bought the sizzle of false promises and too-good-to-be-true deals, and here we are!

So, let us gather about Nancy Pelosi's bare naked table, and recall the Past, project the Future, and bitch about the Present. Our emphasis is economics, political economics, but we are open to side trips and non sequitors....

If you haven't guessed by now, I am a daughter of the Motor City, and spent 29 years in exile before returning to my Native Land. I don't live in the city proper, but in the People's republic of Ann Arbor, as my dittohead uncle called it, since the city is a ghost of its former glory. So expect a lot of detail about the Big Three this weekend!

And in that vein, enjoy this special animation by Mark Fiore:

Owner's Manual 11/1908

lunar 24.11.2008 16:07

Fully…Dollar doing what its supposed to…

-> Posted by Farmboy @ 9:22 am on November 24, 2008
Been filing away some of those greenbacks for hard times.


lunar 24.11.2008 20:13

CNBC Scores Major Exclusive Interview with Alaweed Bin Talal

Posted by Jesse at 12:09 PM :verbeug

lunar 24.11.2008 20:24

Federal Reserve and Treasury Offer Half of US GDP to the Wall Street Banks

Our motto used to be "millions for defense, but not one cent for tribute."

That has changed to "Trillions for the banks, but a few dollars loaned at interest for the real economy."

Hey there all you big strong men,
Time to serve your Uncle Ben,
Don't give up, you must be bold,
Get out there and short some gold.
The Treasury's stash is almost dry,
Oops, the Buck is going to die.

And its one, two, three who are we working for,
Hey hey we know who to thank,
So give your all to Uncle Hank.
And its five, six, seven, don't you dare be late,
Well, there ain't no time to ask them why,
But the Buck is gonna die.

Fed Pledges Top $7.4 Trillion to Ease Frozen Credit
By Mark Pittman and Bob Ivry

Nov. 24 (Bloomberg) -- The U.S. government is prepared to lend more than $7.4 trillion on behalf of American taxpayers, or half the value of everything produced in the nation last year, to rescue the financial system since the credit markets seized up 15 months ago. (But there is no money for Social Security, for Medical programs, for real industry, for people - Jesse)

The unprecedented pledge of funds includes $2.8 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the only plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis. (This isn't the New Deal, its the Raw Deal for the people and the Sweet Deal for the banks that caused our problems through their reckless greed - Jesse)

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in. (That's nothing compared to what the public is calling to be done to the Fed and the Bush Treasury - Jesse)

“Whether it’s lending or spending, it’s tax dollars that are going out the window and we end up holding collateral we don’t know anything about,” said Congressman Scott Garrett, a New Jersey Republican who serves on the House Financial Services Committee. “The time has come that we consider what sort of limitations we should be placing on the Fed so that authority returns to elected officials as opposed to appointed ones...”.....

full story: http://jessescrossroadscafe.blogspo...offer-half.html

Hoka 24.11.2008 21:30

Zitat von lunar
Hey there all you big strong men,
Time to serve your Uncle Ben,
Don't give up, you must be bold,
Get out there and short some gold.
The Treasury's stash is almost dry,
Oops, the Buck is going to die.

And its one, two, three who are we working for,
Hey hey we know who to thank,
So give your all to Uncle Hank.
And its five, six, seven, don't you dare be late,
Well, there ain't no time to ask them why,
But the Buck is gonna die.

Die Melodie zum Text.


lunar 24.11.2008 21:56


lunar 24.11.2008 22:32

Zitat von Hoka

Die Melodie zum Text.


:supi merci

lunar 24.11.2008 22:32

24 November 2008

The Buck Slumps to Support as Stocks Rally Up to Resistance

The dollar showed weakness today as US equities ran the shorts on vaporous hopes of bailouts for the banks.

Notice though that Bucko has not broken any serious support levels so it is too soon to send flowers. So far this is a normal consolidation in a parabolic short squeeze and flight to safety.

We took profits on our long positions today, and went slightly net short when the SP 500 futures hit our intraday target of 866. This rally has a lot of air in it, but this is a light week, with the US markets closing for the Thanksgiving holiday on Thursday.

We are far from a recovery, and will likely go back down and test those lows again, but first things first, and we may see more rally up to the 62% retracement levels.

Posted by Jesse at 4:02 PM :verbeug

lunar 24.11.2008 22:39

1 Anhang/Anhänge
Citi ohne Ende :rolleyes

Mon 24 Nov 2008

Citigroup Under New Management

Posted by Jason under all ur bankz , bailout , bandit , fail
[9] Comments
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What has two arms, reads LOLFed, and owns Citigroup? That’s right, you do! From Bloomberg:
Citigroup also will get a $20 billion cash injection from the Treasury Department, adding to the $25 billion the company received last month under the Troubled Asset Relief Program. In return for the cash and guarantees, the government will get $27 billion of preferred shares paying an 8 percent dividend. Citigroup rose as much as 41 percent in German trading today.

The preferred shares come with warrants to buy something around 250m shares of C at $10 per, which if converted would make the US government almost as big a stakeholder in C as Prince Alwaleed. And there’s a fair chance that by the time this is all over, the government is going to own more bad assets than any one entity should, having promised a tiered backstop of $300b worth of sad Citi assets. The breakdown of the backstop is as follows:

  • The first $40b in losses go to Citi
  • The next $5b in losses go to US Treasury
  • The next $10b in losses go to FDIC
  • The rest goes to the Fed
So with that in mind, I present the following:

lunar 24.11.2008 23:18


lunar 25.11.2008 09:02

Zitat von cherry

KfW treibt Schulden aus Kaiserzeit ein

Die staatliche Kreditanstalt für Wiederaufbau machte in den vergangenen Wochen vor allem durch hohe Verluste und ihre Millionenüberweisung an die bankrotte US-Bank Lehman Brothers von sich reden. Die Zahlung ist umstritten, ebenso wie ein anderes Geschäftsgebaren der Bank. Sie verlangt nämlich noch immer Altschulden zurück, die eigentlich schon längst verjährt sind.

Karl-Heinz-Fröhlich muss einen Kredit seiner Vorfahren zurückzahlen.

Karl-Heinz Fröhlich soll 4.000 Euro an die Kreditanstalt für Wiederaufbau zahlen. Etwa so viel Geld hatte sein Großvater 1920 als Kredit aufgenommen, um einen Gutshof in der Nähe von Pirna in Sachsen zu betreiben. Doch 30 Jahre später konnte die Familie den Kredit nicht mehr zurückzahlen. Sie wurde enteignet, der Hof und das Land gingen in einer Landwirtschaftlichen Produktionsgenossenschaft (LPG) auf. Seitdem haben andere dort gelebt und den Hof bewirtschaftet. Familie Fröhlich erhielt das Gut nie zurück - trotzdem sollen die Nachfahren nun die alten Schulden begleichen. In ihrem Brief drohte die KfW sogar mit Zwangsmaßnahmen, sollte Karl-Heinz Fröhlich das Geld nicht zahlen. Doch er weigerte sich und zog vor Gericht. Schließlich gibt es ein Urteil des Bundesgerichtshofs aus dem Jahr 2001, das entsprechende Forderungen der KfW-Bank als verjährt bezeichnet.
"Ich klage die Bundesrepublik Deutschland an, wie sie mit den Leuten umgeht, mit denen schon die DDR umgesprungen ist. Da hätte man mit Sicherheit andere Regelungen finden müssen und können."

Karl-Heinz Fröhlich

Der CDU-Bundestagsabgeordnete Manfred Kolbe versteht die KfW-Praxis nicht.

Neues Gesetz hebelt Verjährungsfrist aus

Doch Karl-Heinz Fröhlich verlor mit seiner Klage - und das auch vor dem Bundesgerichtshof. Denn die KfW hatte das Urteil aus dem Jahr 2001 nicht hingenommen und beschlossen, dagegen vorzugehen. Im Bundestag wurde schließlich ein neues Gesetz beschlossen, das die Verjährungsfrist aushebelt. Der sächsische CDU-Bundestagsabgeordnete Manfred Kolbe erinnert sich an das Prozedere. Das Gesetz sei von der damaligen rot-grünen Regierung in den Bundestag eingebracht worden. Und da es sich um eine schwer verständliche Materie handelte, habe es keine große Aufmerksamkeit erregt und sei ohne größere Diskussionen beschlossen worden.

Ein altes Dokument unter der Lupe.

Mehr als 700 Altkredite noch offen

Dank des neuen Gesetzes kann die KfW weiter alte Kredite einfordern. Rund 700 Familien sind derzeit bundesweit davon betroffen, das schreibt die KfW auf Anfrage von FAKT. Mehrere tausend Altkredite hat die Bank bereits eingetrieben. So auch von Familie Mai aus dem sächsischen Großenhain. Ihre Vorfahren hatten 1922 eine Hypothek von 18.000 Goldmark für einen Bauernhof aufgenommen. Zu DDR-Zeiten wurden sie enteignet, der Kredit war noch nicht abbezahlt. Die KfW als Rechtsnachfolgerin der DDR-Staatsbank will deshalb jetzt das Geld sehen. Dem Bundestagsabgeordneten Manfred Kolbe ist diese Praxis unverständlich. Sie sei keine Glanzstunde des Rechtsstaats.

"Ich wäre froh, wenn die KfW jetzt endlich zur Einsicht kommt und Uralthypotheken aus der Zeit Kaiser Wilhelms nicht mehr geltend macht und die Menschen, die investiert haben, in Ruhe lässt."

Manfred Kolbe, CDU-Bundestagsabgeordneter

Zuletzt aktualisiert: 25. November 2008, 01:08 Uhr

....soviel zum Thema Rechts(bananen)staat ..... ähnlich wie eine Gestzesänderung über Stiftungen dem zumwinkel zum Verhängnis wurde :rolleyes gibt immer einige Saubermänner die sich über so was freuen :rolleyes

lunar 25.11.2008 09:24


Posted in Uncategorized by emsnews on November 24th, 2008
Oops,’ said the Übergnome of Goldman Sachs as he walked into Congress to give the latest report of the Gnome Raid on the US Treasury. Aka, Ginnungagap
(”magical (and creative) power-filled space”[1]) was the vast, primordial void that existed prior to the creation of the manifest universe.[2] In the northern part of Ginnungagap lay the intense cold of Niflheim, to the southern part lay the equally intense heat of Muspelheim.

Well, back to Paulson’s little, itty bitty mistake: ‘Sorry, HAHAHA, we made mistake! We made little mistake! We left off some zeros from the rescue fund.’ He rubbed his twisted, old hands, sweat pouring off his naked skull top. ‘Yesss…made mistakes, we did, we did! It is $7 TRILLION, not small, insignificant $700 billion. HAHHAHA. Now, give me the Ring of Power.’

Fed Pledges Exceed $7.4 Trillion in Rescue of Companies With Frozen Credit
(Bloomberg) — The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reservelending last week was 1,900 times the weekly average for the three years before the crisis.

When Congress approved the TARP on Oct. 3, Fed Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson acknowledged the need for transparency and oversight. Now, as regulators commit far more money while refusing to disclose loan recipients or reveal the collateral they are taking in return, some Congress members are calling for the Fed to be reined in.

So the gnomes made a bookkeeping mistake! Why belabor them for these missing zeros? They need the money NOW. Today! Or the will see all of the world’s financial systems, all the banks, all the economies will blow up! We are in Ginnungungap territory here: mists and darkness fill all with fear. But the gnomes live in the mists and love fear and will even try to spook dragons...... Goldman May Lead FDIC-Backed Bond Sales After Ruling
Goldman Sachs Group Inc. and Citigroup Inc. may lead banks selling bonds guaranteed by the government as soon as this week, starting a wave of issuance that some analysts said will exceed $400 billion.

Goldman, the biggest U.S. securities firm to convert to a bank, and Citigroup, the bank that received emergency federal aid yesterday, said they plan to issue after the Federal Deposit Insurance Corp. in Washington last week changed the terms to give the debt the “full faith and credit” of the U.S. government and reduce issuing fees.

The FDIC backing gives the securities an implicit AAA rating and opens a new channel for banks to fund themselves after the seizure in credit markets sapped demand for financial debt and sent yields to record highs of 7.24 percentage points above U.S. Treasuries. Banks, which haven’t sold dollar- denominated bonds since September, may raise $400 billion to $600 billion under the program within six months, analysts at Barclays Capital estimated last month.

“I would not underestimate the importance of government guarantee programs being rolled out globally for commercial banks,” said Jim Esposito, the global head of the investment- grade bond syndicate desk at Goldman in New York.

So, bankrupt Citigroup and criminal organization, Goldman Sachs, will be selling the government bonds being written so these same bankrupt bozos can stay above water…arrest them all! :supi Here is the story we need, next: / World / US & Canada - Call for probe into ex-Goldman executives
A senior Republican senator is seeking an investigation into potential conflicts of interest among former Goldman Sachs executives serving at the US Treasury and whether any officials exceeded their authority by implementing a controversial tax change without the approval of Congress.

Chuck Grassley, the most senior Republican on the Senate finance committee, asked Eric Thorson, inspector-general of the Treasury, to investigate the “independence” of several Treasury officials who formerly worked at Goldman Sachs and serve as advisers to Treasury secretary Hank Paulson, the former chief executive of the Wall Street bank.

Little sneaky monsters. They knew they were giving themselves goodies. They seek to do this at all times. They pray no one will notice so they can feast and make merry before someone stops them. Then they whine and cry and cringe. ‘Poor little gnomes! Hissss….Everyone so mean to poor little gnomes,’ they whimper as they sharpen their knives to attack again. Arrest them all.......

full story:

Arrest them all....... die würden selbst im Gefängnis ihre krummen Geschäfte weiter machen :o:mad

lunar 25.11.2008 09:41

Zitat von Hoka

Obama's one-trick wizards

One recalls Ferdinand I of Austria (1793-1875), deposed for incompetence after the 1848 Revolution, who apocryphally shot an eagle, and said: "It's got to be an eagle, but it's only got one head!" Ferdinand thought the two-headed bird of his family crest was the norm, just as the pink-shirted, suspender-wearing Ivy Leaguers thought that two-digit returns were the norm for their investments.

Of course, nothing excludes the possibility that Obama's team will come up with something constructive. But there is no reason to expect a drastic change from the crisis response of the same sort of people (starting with Treasury Secretary Paulson) in the Bush administration. They will bail out incompetent, failing firms and drop money from helicopters and call it a stimulus package. And it will turn out no better than it did for the humiliated Republicans.

.....Rubin, a transition advisor to president-elect Barack Obama, was mentor to Treasury secretary designate Timothy Geithner. Even Goldman Sachs, the thoroughbred trading machine that gave us Treasury Secretary Hank Paulson as well as Rubin, is trading at a fifth of its peak value.

These facts came to mind while reading David Brooks' November 21 New York Times panegyric to Obama's prospective cabinet, which gushes, "Its members are twice as smart as the poor reporters who have to cover them, three times if you include the columnists." Brooks added, "... as much as I want to resent these overeducated Achievatrons ... I find myself tremendously impressed by the Obama transition."

Has Brooks checked the markets? The cleverest people in the United States, the Ivy-pedigreed investment bankers, have fouled their own nests as well as their own net worth, and persuaded the taxpayers to bail them out. If these are the best and the brightest of 2008, America is in very deep trouble.......

:supi Artikel sollte man ganz lesen :cool .....ich versteh auch nicht, dass Rubin immer noch von einem fragwürdigen Ruhm zehrt aus vergangenen Zeiten :gruebel:rolleyes:mad

lunar 25.11.2008 09:56

Mon 24 Nov 2008

What Would You Do With 82 Million Liters Of Vodka?

Posted by alyx under breaking news

From Russia, with sobriety:
Official statistics indicate a collapse in demand for vodka over the past two months. November inventories of unsold vodka stock have risen to 82 million litres, a 600 per cent increase from 2007, according to the National Alcohol Association. The vodka lake has grown even as desperate producers have slashed output, which fell by 15 per cent in October according to industry estimates.

Retailers and producers alike attribute the main reason for the collapse in the market to the evaporation of credit, with many suppliers unable to refinance loans from banks to buy new supplies.

First the credit crunch came for your beer, now it’s come for your vodka. Comrades can’t afford it, and markets can’t get a line of credit to have it on the shelves for them even if they could. You know times are hard. If you still trade Russia, I have two recommendations for you: a large quantity of that surplus vodka, and Truth and Beauty.

:rolleyes ...das könnte gut sein für die Gesundheit oder sehr schlecht, weil dann vermehrt billiger Fusel getrunken wird :(

lunar 25.11.2008 10:04

Mon 24 Nov 2008

Mocking Citi: It’s Not Just For LOLFed Anymore

Posted by Jason under links
1 Comment
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Newsweek’s Daniel Gross has penned an adorable snarkfest honoring Citigroup. My favorite snippet:
As we saw in last week’s shambolic Congressional hearings, in which CEOs of the Big Three were chastised for flying their own planes to Washington, jetting in to cry poverty isn’t just expensive, it’s bad form. Citi should ground corporate jets, and instead send execs on the Acela or the Chinatown Bus (roundtrip $35) when they go to Washington to talk with their new stakeholders. The best option for taxpayer-financed travel: a Joad-style flat-bed (U.S.-made) truck.

lunar 25.11.2008 11:15
Are ETNs Joining the list of Troubled Financial Products? :schwitz

Thursday September 25, 1:34 pm ET
By Ron DeLegge, Editor

SAN DIEGO ( - While much of the public's attention has been focused on exotic financial instruments like credit default swaps (CDS), collateralized debt obligations (CDOs), and auction rate securities (ARS), the $5 billion exchange-traded note (ETN) business has received little mainstream media attention.
But the stunning collapse of major financial institutions like Lehman Brothers Holdings (Other OTC: LEHMQ.PK) could change that by heightening the scrutiny of these little known financial products called ETNs.

ETN Basics

Exchange-traded notes (ETNs) are unsecured debt instruments that pay a return linked to the performance of an index, a currency or a commodity. In a similar arrangement to investing in bonds, ETN payments rely on the full credit and faith of the institution backing the product. Many ETNs have a long-term maturity date that can be anywhere from 20 to 30 years. (To learn more about ETNs, visit's ETNEducationCenter)

The iPath Dow Jones-AIG Commodity Index Total Return ETN (NYSEArca: DJP - News), the iPath S&P GSCI Total Return Index ETN (NYSEArca: GSP - News), and the iPath S&P GSCI Crude Oil Total Return Index ETN (NYSEArca: OIL - News) are among the most popular notes.

Other ETNs track narrow and leveraged indexes.

Examples of this include, the PowerShares DB Gold Double Short ETN (NYSEArca: DZZ - News), the PowerShares DB Crude Oil Double Short ETN (NYSEArca: DTO - News), and the PowerShares DB Agriculture Double Short ETN (NYSEArca: AGA - News).

Investors blindly buying these notes may be thrilled by the thought of juicy returns, but less informed about the serious financial risks they carry.

The Sales Pitch

Having portfolio exposure to hard to reach asset classes like commodities, currencies, or other specialized investment strategies is the typical ETN sales pitch. Another benefit is zero tracking error, which basically means obtaining identical performance to the underlying index or security.

Under the current tax law, commodity and equity linked ETNs are taxed as prepaid contracts. This means investors incur tax consequences only upon the sale, redemption, or maturity of their note. However, this tax loophole is likely to disappear in the future.

In late 2007, the Internal Revenue Service issued an adverse tax ruling on currency linked ETNs. The rule stated that any financial instrument linked to a single currency regardless of whether the instrument is privately offered, publicly offered or traded on an exchange should be treated like debt for federal tax purposes. ETNs linked to commodity and stock baskets aren't likely escape IRS rules for much longer.

Beware of Credit Ratings

For investors relying on the safety of credit ratings, think again. The financial strength of institutions like American International Group (NYSE: AIG - News) and Lehman Brothers deteriorated so fast and unexpectedly, not even the hallowed credit rating agencies could keep up.

While major ETN sponsors like Barclays PLC (NYSE: BCS - News) and Deutsche Bank AG (NYSE: DB - News) appear to be financially sound, solid credit ratings are far from a guarantee things will remain the same.

After seven short months of being launched, Lehman ETNs never delivered on their promise and note holders are now waiting to get their money back along with the rest of the defunct company's creditors.


Purposeful investing should be quick to reduce financial risks, but ETNs don't do that. Along with market risk, ETN investors also bear credit risk. As the Lehman ETN blowup illustrates, if the company backing the products goes out of business, ETN investors are left in the lurch.

All of the asset categories that investors need to build a fully diversified portfolio are already being covered by index exchange-traded funds (ETFs) and mutual funds. You don't need exposure to the Japanese Yen or some other specialized investment strategy to be diversified. And you certainly don't need the additional risk of exotic financial products.

Keep it simple.

Stick with broadly diversified index mutual funds and ETFs.

:schwitz ....alle diese tollen Teile haben einen Pferdefuss :rolleyes:mad

lunar 25.11.2008 13:43

Die Finanzkrise - Der SWAP Wahnsinn

- nicht ganz brandneu, dafür auf deutsch erklärt ;)

lunar 25.11.2008 14:53

Tue 25 Nov 2008

BREAKING NEWS: Fed To Buy More Stuff

Posted by alyx under bailout , bernanke , breaking news
[3] Comments

Continuing the “Another morning, another trillion or so on the balance sheet” game - the Fed creates the Term Asset-Backed Securities Loan Facility (TALF). This will allow the Fed to pile up paper backed by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA) to the tune of $200 billion.

It was also just announced the Fed plans to buy $500 billion worth of mortgage-backed securities and $100 billion worth of direct obligations of the GSEs (government-sponsored entities; think Fannie, Freddie).

Ben Bernanke will soon own your car, college degree, Mastercard, home, and perhaps soul! This is the real Troubled Asset Relief Program.

Aside: I’d like to give a warm welcome this morning to readers of Economix and Rolling Stone, as well as all our new friends Paul Krugman sent our way!

lunar 25.11.2008 15:16

Wie die Citi "gerettet" wurde

verfasst von Gaby , Südosteuropa, 25.11.2008, 14:58

Interessanter Artikel auf Bloomberg, wie das Meeting ablief. So nach der Machart 24 Stunden....

PS: Ist damit eigentlich die Kuh bei der Citi vom Eis? Das hier lässt mich zweifeln...

Kommt da noch mehr?

Gruß - Gaby

Es kommt noch mehr

verfasst von dottore, 25.11.2008, 15:10

Hi Gaby,

> Kommt da noch mehr?

Klar. Neben ihren Bilanzaktiva (2 Bio) hat die C noch 1,23 Bio USD in "außerbilanziellen Vehikeln" (NZZ heute).

Rest der C (25 Mrd und nochmals 20 Mrd als Treasury-Kapitalspritze (Vorzugsaktien) zu 8 bzw. 5 % Garantiedividende).

Die sonstigen Problemchen (hier ausführlich diskutiert) entfallen, da die C jetzt unbeschränkten Zugang zur Fed hat. Dann kann sie die 1,23 gleich direkt bei der New Yorker Fed-Bank vorfahren lassen und dort auskippen - im Gegenzug Bares.


lunar 25.11.2008 15:42


Tue Nov 25 2008 09:04:22 ET

A leading Russian political analyst has said the economic turmoil in the United States has confirmed his long-held view that the country is heading for collapse, and will divide into separate parts.

Professor Igor Panarin said in an interview with the respected daily IZVESTIA published on Monday: "The dollar is not secured by anything. The country's foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998, when I first made my prediction, it had exceeded $2 trillion. Now it is more than 11 trillion. This is a pyramid that can only collapse."

The paper said Panarin's dire predictions for the U.S. economy, initially made at an international conference in Australia 10 years ago at a time when the economy appeared strong, have been given more credence by this year's events.

When asked when the U.S. economy would collapse, Panarin said: "It is already collapsing. Due to the financial crisis, three of the largest and oldest five banks on Wall Street have already ceased to exist, and two are barely surviving. Their losses are the biggest in history. Now what we will see is a change in the regulatory system on a global financial scale: America will no longer be the world's financial regulator."

When asked who would replace the U.S. in regulating world markets, he said: "Two countries could assume this role: China, with its vast reserves, and Russia, which could play the role of a regulator in Eurasia."

Asked why he expected the U.S. to break up into separate parts, he said: "A whole range of reasons. Firstly, the financial problems in the U.S. will get worse. Millions of citizens there have lost their savings. Prices and unemployment are on the rise. General Motors and Ford are on the verge of collapse, and this means that whole cities will be left without work. Governors are already insistently demanding money from the federal center. Dissatisfaction is growing, and at the moment it is only being held back by the elections and the hope that Obama can work miracles. But by spring, it will be clear that there are no miracles."

He also cited the "vulnerable political setup", "lack of unified national laws", and "divisions among the elite, which have become clear in these crisis conditions."

He predicted that the U.S. will break up into six parts :eek:rolleyes - the Pacific coast, with its growing Chinese population; the South, with its Hispanics; Texas, where independence movements are on the rise; the Atlantic coast, with its distinct and separate mentality; five of the poorer central states with their large Native American populations; and the northern states, where the influence from Canada is strong.

He even suggested that "we could claim Alaska :rolleyes - it was only granted on lease, after all." Panarin, 60, is a professor at the Diplomatic Academy of the Russian Ministry of Foreign Affairs, and has authored several books on information warfare.


hier noch ein Kommentar von Jesse :verbeug

25 November 2008

Russian Expert Says US Headed for Collapse

Are we going to allow the Russians to have the last laugh?

No way.

So get out there and buy some stocks, rubes, and help to fully fund our oligarchs so they do not fall behind the elite that divided up Russia's wealth after its collapse.

We cannot afford to have an oligarch gap.

If you are not sure what fraudulent stocks to buy, just put your money in the long bond, and the Treasury and Fed will manage the distribution for you.

Russian expert: U.S. headed for collapse
Nov. 24, 2008 at 7:58 PM

MOSCOW, Nov. 24 -- The United States is heading for collapse amid its financial crisis, a leading political analyst in Russia says.

Igor Panarin, a professor at the Diplomatic Academy of the Russian Ministry for Foreign Affairs, said in an interview with Izvestia, published Monday, that the U.S. economy is in dire straits, RIA Novosti reported.

"The dollar is not secured by anything. The country's foreign debt has grown like an avalanche, even though in the early 1980s there was no debt. By 1998, when I first made my prediction, it had exceeded $2 trillion. This is a pyramid that can only collapse," he said.

Asked when the U.S. economy would collapse, Panarin said the process has already begun.

"It is already collapsing. Due to the financial crisis, three of the largest and oldest five banks on Wall Street have already ceased to exist, and two are barely surviving," he said. "Their losses are the biggest in history. Now what we will see is a change in the regulatory system on a global financial scale: America will no longer be the world's financial regulator."

Posted by Jesse at 9:30 AM

lunar 25.11.2008 17:44


syracus 25.11.2008 17:49

Volume 55, Number 20 · December 18, 2008

What to Do

By Paul Krugman

What the world needs right now is a rescue operation. The global credit system is in a state of paralysis, and a global slump is building momentum as I write this. Reform of the weaknesses that made this crisis possible is essential, but it can wait a little while. First, we need to deal with the clear and present danger. To do this, policymakers around the world need to do two things: get credit flowing again and prop up spending.

The first task is the harder of the two, but it must be done, and soon. Hardly a day goes by without news of some further disaster wreaked by the freezing up of credit. As I was writing this, for example, reports were coming in of the collapse of letters of credit, the key financing method for world trade. Suddenly, buyers of imports, especially in developing countries, can't carry through on their deals, and ships are standing idle: the Baltic Dry Index, a widely used measure of shipping costs, has fallen 89 percent this year.

What lies behind the credit squeeze is the combination of reduced trust in and decimated capital at financial institutions. People and institutions, including the financial institutions, don't want to deal with anyone unless they have substantial capital to back up their promises, yet the crisis has depleted capital across the board.

The obvious solution is to put in more capital. In fact, that's a standard response in financial crises. In 1933 the Roosevelt administration used the Reconstruction Finance Corporation to recapitalize banks by buying preferred stock—stock that had priority over common stock in terms of its claims on profits. When Sweden experienced a financial crisis in the early 1990s, the government stepped in and provided the banks with additional capital equal to 4 percent of the country's GDP—the equivalent of about $600 billion for the United States today—in return for a partial ownership. When Japan moved to rescue its banks in 1998, it purchased more than $500 billion in preferred stock, the equivalent relative to GDP of around a $2 trillion capital injection in the United States. In each case, the provision of capital helped restore the ability of banks to lend, and unfroze the credit markets.

A financial rescue along similar lines is now underway in the United States and other advanced economies, although it was late in coming, thanks in part to the ideological tilt of the Bush administration. At first, after the fall of Lehman Brothers, the Treasury Department proposed buying up $700 billion in troubled assets from banks and other financial institutions. Yet it was never clear how this was supposed to help the situation. (If the Treasury paid market value, it would do little to help the banks' capital position, while if it paid above-market value it would stand accused of throwing taxpayers' money away.) Never mind: after dithering for three weeks, the United States followed the lead already set, first by Britain and then by continental European countries, and turned the plan into a recapitalization scheme.

It seems doubtful, however, that this will be enough to turn things around, for at least three reasons. First, even if the full $700 billion is used for recapitalization (so far only a fraction has been committed), it will still be small, relative to GDP, compared with the Japanese bank bailout—and it's arguable that the severity of the financial crisis in the United States and Europe now rivals that of Japan. Second, it's still not clear how much of the bailout will reach the components of the shadow banking system—largely unregulated financial organizations including investment banks and hedge funds—that are at the core of the problem. Third, it's not clear whether banks will be willing to lend out the funds, as opposed to sitting on them (a problem encountered by the New Deal seventy-five years ago).

My guess is that the recapitalization will eventually have to get bigger and broader, and that there will eventually have to be more assertion of government control—in effect, it will come closer to a full temporary nationalization of a significant part of the financial system. Just to be clear, this isn't a long-term goal, a matter of seizing the economy's commanding heights: finance should be reprivatized as soon as it's safe to do so, just as Sweden put banking back in the private sector after its big bailout in the early Nineties. But for now the important thing is to loosen up credit by any means at hand, without getting tied up in ideological knots. Nothing could be worse than failing to do what's necessary out of fear that acting to save the financial system is somehow "socialist."

The same goes for another line of approach to resolving the credit crunch: getting the Federal Reserve, temporarily, into the business of lending directly to the nonfinancial sector. The Federal Reserve's willingness to buy commercial paper is a major step in this direction, but more will probably be necessary.

All these actions should be coordinated with other advanced countries. The reason is the globalization of finance. Part of the payoff for US rescues of the financial system is that they help loosen up access to credit in Europe; part of the payoff to European rescue efforts is that they loosen up credit here. So everyone should be doing more or less the same thing; we're all in this together.

And one more thing: the spread of the financial crisis to emerging markets makes a global rescue for developing countries part of the solution to the crisis. As with recapitalization, parts of this were already in place during the autumn: the International Monetary Fund was providing loans to countries with troubled economies like Ukraine, with less of the moralizing and demands for austerity that it engaged in during the Asian crisis of the 1990s. Meanwhile, the Fed provided swap lines to several emerging-market central banks, giving them the right to borrow dollars as needed. As with recapitalization, the efforts so far look as if they're in the right direction but too small, so more will be needed.

Even if the rescue of the financial system starts to bring credit markets back to life, we'll still face a global slump that's gathering momentum. What should be done about that? The answer, almost surely, is good old Keynesian fiscal stimulus.

Now, the United States tried a fiscal stimulus in early 2008; both the Bush administration and congressional Democrats touted it as a plan to "jump-start" the economy. The actual results were, however, disappointing, for two reasons. First, the stimulus was too small, accounting for only about 1 percent of GDP. The next one should be much bigger, say, as much as 4 percent of GDP. Second, most of the money in the first package took the form of tax rebates, many of which were saved rather than spent. The next plan should focus on sustaining and expanding government spending—sustaining it by providing aid to state and local governments, expanding it with spending on roads, bridges, and other forms of infrastructure.

The usual objection to public spending as a form of economic stimulus is that it takes too long to get going—that by the time the boost to demand arrives, the slump is over. That doesn't seem to be a major worry now, however: it's very hard to see any quick economic recovery, unless some unexpected new bubble arises to replace the housing bubble. (A headline in the satirical newspaper The Onion captured the problem perfectly: "Recession-Plagued Nation Demands New Bubble to Invest In.") As long as public spending is pushed along with reasonable speed, it should arrive in plenty of time to help—and it has two great advantages over tax breaks. On one side, the money would actually be spent; on the other, something of value (e.g., bridges that don't fall down) would be created.

Some readers may object that providing a fiscal stimulus through public works spending is what Japan did in the 1990s—and it is. Even in Japan, however, public spending probably prevented a weak economy from plunging into an actual depression. There are, moreover, reasons to believe that stimulus through public spending would work better in the United States, if done promptly, than it did in Japan. For one thing, we aren't yet stuck in the trap of deflationary expectations that Japan fell into after years of insufficiently forceful policies. And Japan waited far too long to recapitalize its banking system, a mistake we hopefully won't repeat.

The point in all of this is to approach the current crisis in the spirit that we'll do whatever it takes to turn things around; if what has been done so far isn't enough, do more and do something different, until credit starts to flow and the real economy starts to recover.

And once the recovery effort is well underway, it will be time to turn to prophylactic measures: reforming the system so that the crisis doesn't happen again.

Financial Reform

"We have magneto trouble," said John Maynard Keynes at the start of the Great Depression: most of the economic engine was in good shape, but a crucial component, the financial system, wasn't working. He also said this: "We have involved ourselves in a colossal muddle, having blundered in the control of a delicate machine, the working of which we do not understand." Both statements are as true now as they were then.

How did this second great colossal muddle arise? In the aftermath of the Great Depression, we redesigned the machine so that we did understand it, well enough at any rate to avoid big disasters. Banks, the piece of the system that malfunctioned so badly in the 1930s, were placed under tight regulation and supported by a strong safety net. Meanwhile, international movements of capital, which played a disruptive role in the 1930s, were also limited. The financial system became a little boring but much safer.

Then things got interesting and dangerous again. Growing international capital flows set the stage for devastating currency crises in the 1990s and for a globalized financial crisis in 2008. The growth of the shadow banking system, without any corresponding extension of regulation, set the stage for latter-day bank runs on a massive scale. These runs involved frantic mouse clicks rather than frantic mobs outside locked bank doors, but they were no less devastating.

What we're going to have to do, clearly, is relearn the lessons our grandfathers were taught by the Great Depression. I won't try to lay out the details of a new regulatory regime, but the basic principle should be clear: anything that has to be rescued during a financial crisis, because it plays an essential role in the financial mechanism, should be regulated when there isn't a crisis so that it doesn't take excessive risks. Since the 1930s commercial banks have been required to have adequate capital, hold reserves of liquid assets that can be quickly converted into cash, and limit the types of investments they make, all in return for federal guarantees when things go wrong. Now that we've seen a wide range of non-bank institutions create what amounts to a banking crisis, comparable regulation has to be extended to a much larger part of the system.

We're also going to have to think hard about how to deal with financial globalization. In the aftermath of the Asian crisis of the 1990s, there were some calls for long-term restrictions on international capital flows, not just temporary controls in times of crisis. For the most part these calls were rejected in favor of a strategy of building up large foreign exchange reserves that were supposed to stave off future crises. Now it seems that this strategy didn't work. For countries like Brazil and Korea, it must seem like a nightmare: after all that they've done, they're going through the 1990s crisis all over again. Exactly what form the next response should take isn't clear, but financial globalization has definitely turned out to be even more dangerous than we realized.

The Power of Ideas

As readers may have gathered, I believe not only that we're living in a new era of depression economics, but also that John Maynard Keynes—the economist who made sense of the Great Depression—is now more relevant than ever. Keynes concluded his masterwork, The General Theory of Employment, Interest and Money, with a famous disquisition on the importance of economic ideas: "Soon or late, it is ideas, not vested interests, which are dangerous for good or evil."

We can argue about whether that's always true, but in times like these, it definitely is. The quintessential economic sentence is supposed to be "There is no free lunch"; it says that there are limited resources, that to have more of one thing you must accept less of another, that there is no gain without pain. Depression economics, however, is the study of situations where there is a free lunch, if we can only figure out how to get our hands on it, because there are unemployed resources that could be put to work. The true scarcity in Keynes's world—and ours—was therefore not of resources, or even of virtue, but of understanding.

We will not achieve the understanding we need, however, unless we are willing to think clearly about our problems and to follow those thoughts wherever they lead. Some people say that our economic problems are structural, with no quick cure available; but I believe that the only important structural obstacles to world prosperity are the obsolete doctrines that clutter the minds of men.

—November 20, 2008

lunar 25.11.2008 19:13

Tue 25 Nov 2008

We Need Bjork In Riot Gear

Posted by alyx under bailout

Protesters in Iceland turn violent over the handling of the economic crisis. This is in sharp contrast to how we react in the United States, which consists mostly of complaining that we are still paying our mortgages and credit card bills and wishing our application to become a bank holding company would get processed already.

Sounds like fun over there, they’re calling for the PMs head and showcasing their sense of black humor:
A young man climbed onto the balcony of the Althing building, where the president appears upon inauguration and on Iceland’s national day, and hung a banner reading: “Iceland for Sale - $″, the amount of the loan Iceland is getting from the IMF.

lunar 25.11.2008 19:15 tönt so schön :eek jedoch man lernt nie aus :rolleyes

The Case Against Leveraged ETFs

by: Tristan Yates May 17, 2007 | about stocks: DDM / DGP / DIG / DZZ / MVV / QLD / ROM / RXL / SAA / SSO / UCC / UGE / UKF / UKK / UKW / UPW / URE / USD / UVG / UVT / UVU / UWM / UXI / UYG / UYM

Tristan Yates and Lye Kok (IndexRoll) submit: The Leveraged ETF offensive is under way. A year ago, there were no leveraged ETFs in existence. Today, there are at least fifty leveraged ETF products in the marketplace and another fifty in the SEC/AMEX pipeline. By this time next year, perhaps every traded ETF will have a 2x leveraged counterpart. Are these leveraged ETFs suitable for retail investors? No, they are not.

In this article, we lay out the case against these products, based upon popular misconceptions of what exactly these ETFs provide, a hidden trap related to leverage, and the poor performance of related funds and of the ETFs themselves.

Note that this article updates a SeekingAlpha article posted about six weeks ago, and we’d like to thank the many readers who were kind enough to provide us with additional research and commentary.

The Daily Double

Leveraged ETFs are exchange-traded funds that are based upon well-known indexes, but that provide investors with additional leverage by using borrowed money. Their goal is to increase the return of the underlying index and provide a better return for the fund’s investors. Typically they provide $1 of debt for every $1 of investor equity, and are marketed as 2X funds.

Leveraged ETFs are implemented using financial derivatives, such as options, swaps, and index futures. All of these tools are available to individual investors, but are much more complex than traditional share buying and selling and require larger amounts of capital. Thus, the advantage of the leveraged ETFs for many investors is a reduction of complexity and lower capital requirements.

Two companies, Rydex and ProShares, dominate the leveraged ETF marketplace. They have offered leveraged investment funds for many years, and have recently repackaged these products into ETFs.

A listing of some of the more popular ProShares leveraged funds:

A widely held misconception about these funds is that they will offer twice the return of the underlying index, which means that if the S&P 500 returns about 10% a year, then the SSO should return 20%. But that’s not true, because these funds only double the daily return, and there’s a big difference between doubling the daily return and doubling the annual return.

What’s the difference? Let’s say that one day the market goes up 10%, and the next day it falls 10%. The two-day loss for the index is 1%, but the loss for the leveraged fund is 4%. Here’s why:

Index: (1 + 10% ) x (1 – 10%) = 1.1 x 0.9 = 0.99, 1% loss
X2 Fund: (1 + 20%) x (1 – 20%) = 1.2 x 0.8 = 0.96, 4% loss

Thus over a two day period, this fund’s losses are 4x the amount of the index, not 2x. This example comes from the ProShares prospectus, and is a clear indication that investors in 2X funds should not expect their investment to provide double the return of the S&P 500 for any period longer than one day.......

full story:

lunar 25.11.2008 20:25


Obama verspricht radikale Haushaltsreform für Multimilliardenprogramm

Wer viele Milliarden für ein Konjunkturprogramm ausgibt, muss an anderer Stelle sparen: Deshalb kündigte der künftige US-Präsident Obama an, den Staatshaushalt kritisch durchforsten zu lassen. Eine Haushaltsreform ist für ihn ein absolutes Muss. mehr... [ Forum ]

lunar 26.11.2008 09:23

25 November 2008

Having Trouble With This Market? Highest Volatility in a Century at Least

Can't seem to hold a position, make a decent return, keep from getting whipsawed, find a trend?

No wonder, because this is one of the most volatile markets in the past century.

Our opinion, for what it is worth, is that the volatility is being turbocharged by the injections of Fed liquidity into the Wall Street banks, who have few options for higher returns than Treasuries. So their trading desks are churning the markets to hammer the hedge funds and skin the small specs who are loss sensitive and unsophisticated in their use of leverage and hedging.

The financial sector needs to be reformed badly. The economy will not recover until real wages start advancing again so consumption and savings can resume. Look for the well-heeled elites to fight that every step of the way, and appeal to the worst in our character as part of a campaign to do it.

If you are not an experienced trader now is a good time to sit in cash and add some precious metals on weakness, and above all, learn to live within your means.

Posted by Jesse at 3:26 PM :verbeug

lunar 26.11.2008 11:35

...hat eben alles zwei Seiten :rolleyes

"Facing something not faced since Depression. No functioning banks - only Congress"

04:46 - Autoindustrie yes or no :gruebel

lunar 26.11.2008 11:37


Eine Stadt macht dicht

Diese Stadt hatte alles - jetzt steht sie vor dem Nichts. Detroit erlebt im Gleichtakt mit GM, Ford und Chrysler einen beispiellosen Niedergang. Leere Fabriken, ausgebrannte Ruinen, verwahrloste Straßen: Szenen aus einer US-Autometropole, die am Ende ist. Von Stefan Robert Weißenborn mehr... [ Forum ]

lunar 26.11.2008 15:00

Zitat des Tages - aus Trader's Daily
"Eine gewisse Stumpfheit des Geistes scheint aber eine notwendige Eigenschaft, wenn nicht jedes aktiven Menschen, so doch jedes ernsthaften Geldsammlers zu sein."

- Gelesen in: „Der Idiot" von Fjodor Dostojewski (1821-1888)

aha - mir fehlt wohl diese Eigenschaft :rolleyes beim Geld sammeln :o;):hihi

lunar 26.11.2008 16:13

26 November 2008

AIG Under Investigation for Fraud

Rogue executive in a rogue company.

Tainting the purity of Wall Street insiders most likely.

Looks like AIG might have to take a hit for the team.

Ex-AIG exec under probe by U.S. prosecutors
Wed Nov 26, 2008 1:35am EST

NEW YORK (Reuters) - Former American International Group Inc executive Joseph Cassano is under investigation by U.S. prosecutors for possibly misleading auditors and investors about subprime mortgage-related losses, according to a Bloomberg report citing people familiar with the probe.

The report said investigators are asking auditors at PricewaterhouseCoopers about memos they wrote last fall on how Cassano and other AIG executives valued contracts protecting $62 billion in mortgage-backed securities.

The U.S. government is also investigating AIG's reliance on valuations that have been questioned by auditors and banks, according to the report.

Cassano previously led AIG Financial Products, the source of billions of dollars of losses which led to the insurance company needing to be rescued by the U.S. government in a $85 billion deal in September.

In October, U.S. lawmakers criticized AIG for giving Cassano a $1 million-a-month consulting contract after he retired in March.

Posted by Jesse at 9:34 AM :verbeug
...da hat er bei der Firma schon weiss ich wieviel Schaden angerichtet - und dann das ---> a $1 million-a-month consulting contract:dumm:dumm:dumm

lunar 26.11.2008 16:45

26 November 2008

Chicago PMI Worst Report Since 1982

It may seem counterintuitive that US stocks are resilient after a morning of some of the bloodiest economic numbers to date.

Talking heads were on the financial channels proclaiming "Priced In!" and "a bottom is at hand."

It should be noted that this is a holiday-shortened week, heading into the November weekend close. Many financial institutions end their fiscal year in November.

The nation will not recover until the financial sector is brought back into a balance with the real economy.

Increasingly the public is not believing the usual lies and deceptions. A bottom may be in for the willing acceptance of fraud and a tolerance of white collar crime. The backlash could be terrific.

Dollar briefly extends declines vs yen after Chicago PMI
Wed Nov 26, 2008 9:58am EST

NEW YORK, Nov 26 (Reuters) - The U.S. dollar briefly extended declines versus the Japanese yen on Wednesday after a report on business activity in the Midwest fell more than expected...

The Institute for Supply Management-Chicago said its index of Midwest business activity fell in November to 33.8 from 37.8 in October. Economists polled by Reuters had forecast a drop to 36.7.

"The Chicago PMI is the worst number since Feb. 1982 and the numbers continue to show that the economy is still deteriorating," said Andrew Bekoff, chief investment officer at LPB Capital LLC in Doylestown, Pennsylvania.

Posted by Jesse at 10:27 AM :verbeug

lunar 26.11.2008 16:50

U.S. Banks May Write Down $44 Billion in Quarter (Update1)

By Ben Livesey

Nov. 26 (Bloomberg) -- U.S. banks including Citigroup Inc. may post about $44 billion in writedowns and charges on bad loans in the fourth quarter, eroding the government's banking bailout plan :rolleyes Oppenheimer & Co.'s Meredith Whitney said.

Accounting rule changes on how some financial assets are valued may also trigger $25 billion in bad-loan charges over the next 12 months, analysts led by New York-based Whitney wrote in a note today.

Writedowns and other capital pressures, including credit- rating downgrades and the $20-billion bailout of Citigroup this week, have taken much of the funds of the $700 billion bank-rescue plan, Whitney said. Many U.S. lenders will call on the state again for capital over the next 12 months, the analyst said.

``We remain cautious on the financial institutions as they continue to face asset-price declines and a prolonged weak economic environment,'' said Whitney, who cut earnings estimates for banks including Citigroup, JPMorgan Chase & Co. and Bank of America Corp. by an average of 17 percent for this year and 2009.

To contact the reporter on this story: Ben Livesey in London

Last Updated: November 26, 2008 07:55 EST

...diesen Sumpf zu durchwaten braucht wohl noch seine Zeit :schwitz

lunar 26.11.2008 17:48

..das ist ein echter Wert :supi :kiss

Hoka 26.11.2008 20:37

Schüsse auf Saakaschwili waren inszeniert

Der angebliche russische Angriff auf das Auto von Georgiens Präsident Michail Saakaschwili und Polens Staatschef Lech Kaczynski war völlig ungefährlich: Die Situation wurde von den Georgiern inszeniert.

Zu diesem Schluss kommt der polnische Geheimdienst AWB, wie heute die polnische Zeitung «Dziennik» schreibt. Der Untersuchungsbericht des AWB zu dem Vorfall am 23. November konstatiert, dass der georgische Geleitschutz der Kolonne auf die ersten Schüsse überhaupt nicht reagiert hat, wie es auf der unabhängigen Nachrichtensite «Russland-Aktuell» heisst.

Ausserdem habe sich Saakaschwili während des Zwischenfalls «locker verhalten und gelächelt». Und: Man hätte kurz vorher den Bus mit den Journalisten vorbei gelassen, damit die «die Möglichkeit hatten, das Geschehen aufzunehmen». Fazit: Georgien hat den Überfall selbst inszeniert.

Kaczynski hatte nach dem Vorfall während seines Georgien-Besuchs Russland beschuldigt, die Schuld für die Schüsse zu tragen; das russische Aussenministerium bezeichnete dies als «Provokation reinsten Wassers».

Aktuelle Uhrzeit 05:14

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