[QUOTE=xilman;212941]According to [url]http://news.bbc.co.uk/1/hi/business/8639440.stm[/url], Greece has finally called in the EU and IMF for assistance. Wishing the problem would just go away clearly hasn't worked.[/QUOTE]

Here`s [url=http://globaleconomicanalysis.blogspot.com/2010/04/greek-pm-calls-greece-sinking-ship-tip.html]Mish`s latest[/url] on Greece ... the contagion has now definitely begun to spread in earnest to the debt of the other PIIGS. But it`s all good - now you know why the IMF just 10-tupled its emergency lending capacity.

Meanwhile in the U.S. markets, optimism (or the HFT momentum-chasing algos, take your pick) continues to rampage. "These are not the latest risk-asset valuation bubbles you`re looking for" ... only 200-or-so trading days to go until we can break out "Dow 36,000" hats. I`m still agonizing over whether to wait until Apple hits $300 or $500 to start buying shares ... I`m a cautious guy, I want "confirmation of the long-term bullish trend" here.

[b]Friday (true) Humor:[/b]

[url=http://news.yahoo.com/s/ap/20100423/ap_on_bi_ge/us_sec_porn]SEC staffers watched porn as economy crashed[/url]
[quote]A senior attorney at the SEC’s Washington headquarters spent up to eight hours a day looking at and downloading pornography. When he ran out of hard drive space, he burned the files to CDs or DVDs, which he kept in boxes around his office.[/quote]
[i]My Comment:[/i] "Dear Chairman Bernanke: I work at the SEC, and even though I am not classified as a bank holding company, I would like to apply for access to the Federal Reserve`s discount lending facilities, as I am currently having a liquidity crisis ... in my pants."

ZeroHedge offers [url=http://www.zerohedge.com/article/light-secs-pornography-fetish-revalations-bill-singer-proposes-simple-sop-checklist]this helpful glossary[/url] to SEC staffers apparently confused about the meaning of such common financial-industry terms such as "Initial Public Offering" (which is not a reference to a girl allegedly new to the flesh trade).

...And special guest commentator Ben Dover III has breaking news on the Greek debt crisis:

[url=http://www.zerohedge.com/article/greece-declares-unilateral-withdrawal-reality]Greece Declares Unilateral Withdrawal From Reality[/url]
[quote]ATHENS—The Greek government announced today that Greece was permanently withdrawing from reality, effective immediately. “After careful consideration of all our options, we have determined that this is the best course of action for Greece at this difficult time,” Greek Finance Minister George Papakantpeydabillous said in a statement written in fairy dust. Asked whether the withdrawal was a response to Greece’s debt crisis, Papakantpeydabillous made clear that the withdrawal was comprehensive. “We’re not just talking about economic reality. We fully intend to ignore reality in every way, shape and form. We’re sick and tired of being straight-jacketed by the inflexible dictates of objective experience,” he said. Papakantpeydabillous added that the withdrawal was not a radical departure for Greece. “Actually, our de facto withdrawal occurred several years ago — we just figured it was time to make it official.” [/quote]
[i]My Comment:[/i] Fun Game: See if you can spot all the risible faux-Greek names in the above article.

Latest on the SEC/Goldman Case
 

Great op-ed by Bloomberg`s Michael Lewis (author of [url=http://0-www.amazon.com.librarycatalog.vts.edu/Liars-Poker-Michael-Lewis/dp/039333869X/ref=pd_sim_b_1]Liar`s Poker[/url] and more-recently, [url=http://0-www.amazon.com.librarycatalog.vts.edu/Big-Short-Inside-Doomsday-Machine/dp/0393072231]The Big Short[/url]):

[url=http://www.bloomberg.com/apps/news?pid=20601039&sid=aWUolZvh4qmE]Bond Market Will Never Be the Same After Goldman[/url]
[quote]What begins as an effort to change your business may well end up as an attempt to change your soul.

Among the many likely consequences of the SEC’s decision to sue Goldman Sachs for fraud is a social upheaval in the bond markets.

Indeed, the social effects of the SEC’s action will almost certainly be greater than the narrow legal ones. Just as there was a time when people could smoke on airplanes, or drive drunk without guilt, there was a time when a Wall Street bond trader could work with a short seller to create a bond to fail, trick and bribe the ratings companies into blessing the bond, then sell the bond to a slow-witted German without having to worry if anyone would ever know, or care, what he’d just done.

That just changed. [/quote]
[i]My Comment:[/i] Interestingly, John Paulson (the hedge-fund manager who helped hand-select the toxic debt securities which Goldman bundled into the Abacus deal) was one of those betting big against subprime and Alt-A who was not featured in Lewis` [i]The Big Short[/i]. That seemed a glaring omission when I first read reviews of the book ... now it has me wondering whether Lewis suspected (or knew) at the time he wrote the book that there was something hinky about Paulson`s dealings. (Note that the SEC has not as of this date charged Paulson with any wrongdoing.)

Barry Ritholtz has great post on the same topic today -- I found the background information about Robert Khuzami, director of enforcement at the revamped SEC, especially interesting and a cause for hope that this is more than mere political theater to support the Dodd/Obama "financial reform" agenda (1100-plus pages of too-complex-to understand legislation when 20 pages of simple re-regulation which includes resolution authority for TBTFs, derivatives reform, reinstatement of Glass-Steagall, reinstatement of the pre-Hank-Paulson leverage limits, and reinstatement of mark-to-market accounting rules would accomplish more ... note also that the Dodd senate bill guts the Ron-Paul/Alan-Grayson audit-the-Fed initiative previously passed by the house):

[url=http://www.ritholtz.com/blog/2010/04/10-things-you-dont-know-gs-case/]10 Things You Don’t Know (or were misinformed) About the GS Case[/url]:
[quote]I have been watching with a mixture of awe and dismay some of the really bad analysis, sloppy reporting, and just unsupported commentary about the GS case.

I put together this list based on what I know as a lawyer, a market observer, a quant and someone with contacts within the SEC. (Note: This represents my opinions, and no one elses).

------------------------

1. [i]This is a Weak Case[/i]: Actually, no -- its a very strong case. Based upon what is in the SEC complaint, parts of the case are a slam dunk. The claim Paulson & Co. were long $200 million dollars when they were actually short is a material misrepresentation -- that`s Rule 10b-5, and its a no brainer. The rest is gravy.

2. [i]Robert Khuzami is a bad ass, no-nonsense, thorough, award winning Prosecutor[/i]: This guy is the real deal -- he busted terrorist rings, broke up the mob, took down security frauds. He is now the [a href="http://www.sec.gov/news/press/2009/2009-31.htm" target="_blank"]director of SEC enforcement[/a]. He is fearless, and was awarded the Attorney General`s Exceptional Service Award (1996), for "[i]extraordinary courage and voluntary risk of life in performing an act resulting in direct benefits to the Department of Justice or the nation[/i]."
When you prosecute mass murderers who use guns and bombs and threaten your life, and you kick their asses anyway, you ain`t afraid of a group of billionaire bankers and their spreadsheets. [i]He is the shit.[/i] My advice to anyone on Wall Street in his crosshairs: If you are indicted in a case by [i]Khuzami[/i], do yourself a big favor: Settle.

3. [i]Goldman lost $90 million dollars, hence, they are innocent[/i]: This is a civil, not a criminal case. Hence, any [i]mens rea[/i] -- guilty mind -- does not matter. Did they or did they not violate the letter of the law? That is all that matters, regardless of what they were thinking -- or their P&L.
4. [i]ACA is a victim in this case[/i]: Not exactly, they were an active participant in ratings gaming. Look at the back and forth between Paulson`s selection and ACAs management. 55 items in the synthetic CDO were added and removed. Why?

What ACA was doing was [u]gaming the ratings agencies for their investment grade[/u], Triple AAA ratings approval. Their expertise (if you can call it that) was knowing exactly how much junk they could include in the CDO to raise yield, yet still get investment grade from Moody`s or S&P. They are hardly an innocent party in this.
5. [i]This was only one incident[/i]: The Market sure as hell doesn`t think so -- it whacked 15% off of Goldman`s Market cap. The aggressive SEC posture, the huge reaction from Goldie, and the short term market verdict all suggest there is more coming.
If it were only this one case, and there was nothing else worrisome behind it, GS would have written a check and quietly settled this. Their reaction (some say over-reaction) belies that theory. I suspect this is a tip of the iceberg, with lots more problematic synthetics behind it.
And not just at GS. I suspect the kids over at Deutsche bank, Merrill and Morgan are working furiously to review their various CDOs deals.

6. [i]The Timing of this case is suspect[/i]. More coincidental, really. The Wells notice (notification from the SEC they intend to recommend enforcement) was over 8 months ago. The White House is not involved in the timing of the suit itself, it is a lower level staff decision.
7. [i]This is a Complex Case[/i]: Again, no. Parts of it are a little more sophisticated than others, but this is a simple case of fraud/misrepresentation. The most difficult part of this case is likely to turn on what is a "material omission." Paulson`s role in selecting mortgages may or may not be material -- that is an issue of fact for a jury to determine. But complex? Not even close.
8. [i]The case looks thin:[/i] What we see in the complaint is the bare minimum the prosecutor has to reveal to make their case. What you don`t see are all the emails, depositions, interrogations, phone taps, etc. that the prosecutors know about and GS does not. During the litigation discovery process, this material slowly gets turned over (some is held back if there are other pending investigations into GS).

Going back to who the prosecutor in this case is: His legal reputation is he is very thorough, very precise, meticulous litigator. If he decided to recommend bringing a case against the biggest baddest investment house on Wall Street bank, I assure you he has a major arsenal of additional evidence you don`t know about. Yet.
Typically, at a certain point the lawyers will tell their client that the evidence is overwhelming and advise settling. That is around 6-12 months after the suit has begun.
9. [i]This case is Political[/i]: I keep hearing that phrase, due to the SEC party vote. It is incorrect. What that means is the case is not political, it means it has been [i]politicized as a defense tactic.[/i] There is a huge difference between the two.
10. [i]I`m not a lawyer, but . . .[/i] Then you should not be ignorantly commenting on securities litigation. Why don`t you pour yourself a tall glass of STF up and go sit quietly in the corner.

------------------------

I have $1,000 against any and all comers that GS does not win -- they settle or lose in court. Any takers?[/quote]

Good week to own apple shares:

GM Hires J. Goebbels PR Consulting Inc.
 

And I would be remiss in my unofficial post as mersenneforum`s "chief econorrhea victim" if I didn`t point out the shell-games-with-bailout-monies being played by Government Motors, which this week launched a noisy "We paid back our government loan, 5 years ahead of schedule, aren`t you proud of us?" national advertising campaign, no doubt paid for by more of the same not-quite-paid-back bailout funds (This is a Fox News link, but I first heard about the robbing-Peter-to-pay-Paul nature of the deal last weekend on a C-SPAN talk show):

[url=http://www.foxnews.com/politics/2010/04/23/gm-hot-water-ftc-truth-advertising/]GM Could Be in Hot Water With FTC Over Truth in Advertising[/url]: [i]General Motors is running ads on all the major networks this week claiming it has repaid its bailout from the taxpayers "in full." But the claim isn't standing up to scrutiny from lawmakers and government watchdogs who have found that the automaker was able to repay the bailout money only by dipping into a separate pot of bailout funds.[/i]
[quote]General Motors is running ads on all the major networks this week claiming it has repaid its bailout from the taxpayers "in full." But the claim isn't standing up to scrutiny from lawmakers and government watchdogs who have found that the automaker was able to repay the bailout money only by dipping into a separate pot of bailout funds.

The TV spot may land GM in hot water with the Federal Trade Commission over its truth-in-advertising laws, which prohibit ads that are "likely to mislead consumers."

"We have repaid our government loans in full — with interest — five years ahead of the original schedule," says Ed Whitacre, chairman and CEO of General Motors Company, asking Americans to give the bankrupt company another look.

But a top Senate Republican has accused GM of misleading taxpayers about the loan repayment, saying [b]the struggling auto giant was able to repay a $6.7 billion bailout loan only by using other bailout funds in a special escrow account.[/b]

Iowa Sen. Chuck Grassley's charge was backed up by the inspector general for the bailout — also known as the Trouble Asset Relief Program, or TARP. Watchdog Neil Barofsky told Fox News, as well as the Senate Finance Committee, that General Motors used bailout money to pay back the federal government.

"It appears to be nothing more than an elaborate TARP money shuffle," Grassley, the ranking Republican on the Senate Finance Committee, said in a letter Thursday to Treasury Secretary Timothy Geithner.[/quote]
[i]My Comment:[/i] And even if we look past the shell game at play in the above, there is of the course the matter of the [url=http://www.forbes.com/2010/04/21/general-motors-debt-business-autos-gm.html?boxes=Homepagelighttop]other $50 billion bailout[/url] GM received by way of the government magically valuing the bankrupt company at something approaching its all-time high-water mark when it decided to take an "equity stake". (The previous batch of equity stakeholders have been wiped out via similar accounting magic).

Pot & Kettle
 

[URL]http://news.bbc.co.uk/1/hi/business/8641631.stm[/URL]

[quote]"Secretary Geithner encouraged them to move quickly to put in place a package of strong reforms and substantial concrete financial support," said a statement from his office after the talks[/quote]

Greece may be the elephant in the bathtub, but there are giraffes in the sink and albatrosses in the belfry.

This is the first serious challenge the EEC has faced. One member has over-borrowed and gotten into financial difficulties. Or is it just one member? Maybe not. Spain and Italy, and at least 3 more member states appear to be in nearly as bad condition. The rest of the EU has a choice to stabilize the weak members by subsidizing their economies or to abandon them. You can argue about the right or wrong of it but the first effort will be to pump money into the failing economies. The end result will be that the problem (overspending, borrowing) does not get addressed and therefore the fall becomes longer and the landing at the bottom becomes more overwhelming.

The wise investor will avoid these economies like the plague.

DarJones

GreeceFire | Fabulous Fab's subprime love letters
 

[QUOTE=Fusion_power;213090]Greece may be the elephant in the bathtub, but there are giraffes in the sink and albatrosses in the belfry.

This is the first serious challenge the EEC has faced. One member has over-borrowed and gotten into financial difficulties. Or is it just one member? Maybe not. Spain and Italy, and at least 3 more member states appear to be in nearly as bad condition.[/QUOTE]

...Making it a really good thing that the same European Central Bank officials who have been so simply masterful in handling the Greek debt crisis are now reassuring us that the [strike]subprime mortgage market implosion is "contained"[/strike] Greek debt crisis is "contained":

[url=http://www.bloomberg.com/apps/news?pid=20601087&sid=a0LvRhQAARFU&pos=7]Greek Debt Crisis Won’t Spread Through Europe, Officials Say[/url]: [i]European Central Bank officials dismissed speculation that Greece’s budget crisis will spill over to other countries in the euro region.[/i]
[quote]“There is no economic cause for a contagion discussion,” ECB Governing Council member Ewald Nowotny said in an interview in Washington.

Concern that Greece’s woes could spread to other indebted euro-area countries has been pushing up borrowing costs of nations including Portugal and Spain. The countries’ budget deficits as a share of gross domestic product were more than three times the European Union limit of 3 percent last year.

“Of course Spain is not Greece,” ECB President Jean- Claude Trichet said April 23 after meeting with Group of 20 finance chiefs.[/quote]
[i]My Comment:[/i] That`s right, Spain is indeed not Greece ... with respect to sovereign-debt issues and economic malaise, it`s a much bigger, Spanish-speaking version of Greece. Anyway, how can there be "risk of further contagion" when the disease has already infected all the at-risk subjects and is incubating steadily, and it`s merely a matter of waiting for the onset of symptoms?
[quote]“Is there a risk for other countries in the zone? No, the other situations have absolutely nothing to do with that of Greece,” Bank of France Governor Christian Noyer, who represents his country on the ECB council, said April 24. [/quote]
[i]My Comment:[/i] Anybody around these here parts man enough to call Mr. Noyer a liar? ... go ahead, I dare you.


And speaking of "liar, liar, pants on fire!" ... In addition to the [url=http://globaleconomicanalysis.blogspot.com/2010/04/emails-suggest-goldman-made-money.html]recently-released internal e-mails[/url] showing Goldman Sachs apparently lied in recent statements that they "lost money from the housing meltdown", we now have this trove of intimate, passionate, conflicted love letters from just-indicted young Goldman trader Fabrice Tourre (we hope the indictments don`t end with him, as I am certain he was not acting in rogue-trading Nick-Leeson fashion) to his sweetie:

[url=http://www.reuters.com/article/idUSTRE63O26E20100425]Goldman's "Fabulous" Fab's conflicted love letters[/url]: [i]Fabrice Tourre and his girlfriend talked like a couple very much in love.[/i]
[quote]They emailed back and forth about how they wanted to curl up in each other's arms and how they looked forward to tender moments together. Tourre, a Goldman Sachs bond trader, also wrote in the emails of the impending collapse of the subprime mortgage market and how he was masterminding ways at Goldman to make money from it.

Little did they know that three years later these very personal emails written through Tourre's Goldman Sachs e-mail account would become part of one of the biggest investigations into the subsequent financial crisis.

In the email exchanges between Tourre and his girlfriend, Marine Serres, Tourre comes off as a young, hotshot trader who foresaw the subprime meltdown while still selling shoddy subprime-backed products so prolifically he could peddle them to "widows and orphans."

But Tourre -- the only individual the Securities and Exchange Commission charged in its fraud case against the firm -- also seems ethically conflicted.

"Anyway, [b]not feeling too guilty about this, the real purpose of my job is to make capital markets more efficient and ultimately provide the U.S. consumer with more efficient ways to leverage and finance himself, so there is a humble, noble and ethical reason for my job[/b] ;) amazing how good I am in convincing myself !!!" Tourre said in an e-mail to Serres in January 2007.

That portion of the e-mail reflecting Tourre's conflicted views on his role in the subprime meltdown immediately followed another part of the e-mail that the SEC released in its complaint earlier this month.

The SEC's complaint only included Tourre referring to himself as "fabulous Fab" and talking about "standing in the middle of all these complex, highly leveraged, exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!"

The SEC left out Tourre's ethical musings in its complaint.

Goldman Sachs released the Tourre emails over the weekend as it readies for its appearance before a Senate panel on Tuesday. Goldman Sachs Chief Executive Lloyd Blankfein and Tourre are scheduled to testify, along with other former and current executives.

The collection of e-mails also show that Tourre was not the only person at Goldman with confidence the subprime market was doomed.

Daniel Sparks, a former head of the mortgages department at Goldman, is also expected to testify on Tuesday before the Senate Permanent Subcommittee on Investigations.

"According to Sparks, that business is totally dead, and the poor little subprime borrowers will not last so long!!!" Tourre wrote in a March 7, 2007, email to his girlfriend.

Tourre -- who refers to Serres at one point as a "super-smart French girl in London" -- also tells her about selling to unwitting investors the type of synthetic collateralized debt obligation, or CDO, at the center of the SEC case.

The SEC charges that Tourre and Goldman fraudulently marketed an "Abacus" CDO by hiding vital information from investors, including the role that hedge fund Paulson & Co played in picking mortgage products tied to the CDO. Paulson & Co betted against the CDO.

"Just made it to the country of your favorite clients!!! I'm managed (sic) to sell a few abacus bonds to widow and orphans that I ran into at the airport, apparently these Belgians adore synthetic abs cdo2," Tourre wrote in June 2007.[/quote]
[i]My Comment:[/i] Ah yes, selling doomed-to-implode toxic debt products to widows and orphans ... all hail the oh-so "efficient" capital markets. Tomorrow`s Senate hearing should be rather interesting ... they are probably deep in rehearsing "how to pretend to be humble, noble and ethical" at Squidquarters as I write this.


[b]"Bankster" spotted in the wild in 1933[/b]:

On a philological note, I wonder if this 1933 [i]Time[/i] article is the first sighting-in-the-wild (at least in mainstream-printed-media form) of the neologism "bankster"?

[url=http://www.ritholtz.com/blog/2010/04/monstrous-system-of-guaranteeing-deposits/#comments]FDIC Deposit Insurance: “A Monstrous System of Guaranteeing Deposits”[/url]

"This is not the contagion you're looking for..."
 

[url=http://www.bloomberg.com/apps/news?pid=20601085&sid=aA637.rWSN.U]Greece's Sovereign Debt Ratings Are Cut to Junk by S&P Amid Debt Concern[/url]: [i]Standard & Poor’s Ratings Services lowered its long- and short-term sovereign credit ratings on Greece to ‘BB+’ and ’B’, respectively, from ’BBB+’ and ’A-2’. The outlook is negative.[/i]

[i]My Comment:[/i] As the EMU talking heads have been so confidently assuring us, "no risk of contagion" ... but not because the problem is "contained", rather, because [url=http://www.bloomberg.com/apps/news?pid=20601085&sid=aqPjUEkeXrfw]contagion[/url] is already [url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aV6670dSmZeo]well-underway[/url]. Markets selling off hard on the news, but you just have to give the low-volume-continual-meltup-algos time to stem the trend, and I`m sure we`ll be back on course for the "Dow 36,000 by the November elections, bitches" Ponzi-market targets. Keep the faith, people!

[b]Leetle French Steenker Update:[/b]

My Gallic friends will surely be annoyed by this admission, but whenever I read of under-fire (note yesterday I incorrectly said indicted, but as - in contrast to the justice department, which should have been given a charge to aggressively go after these crooks as far back as 2008 - the SEC can only bring civil charges, he is technically a defendant in a civil fraud lawsuit) Goldman trader [url=http://www.bloomberg.com/apps/news?pid=20601103&sid=aCsYZDKG3pVU]Fabrice "Fabulous Fab" Tourre[/url], I can`t help thinking of another oh-so-full-of-himself famous French stinker:

[QUOTE=ewmayer;213246][url=http://www.reuters.com/article/idUSTRE63O26E20100425]Goldman's "Fabulous" Fab's conflicted love letters[/url]: [i]Fabrice Tourre and his girlfriend talked like a couple very much in love.[/i][/QUOTE]

...And speaking of secret love-and-investments letters:

[url=http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/7636233/Warren-Buffett-and-Prince-Alwaleeds-secret-letters.html]Warren Buffett and Prince Alwaleed's secret letters[/url]: [i]Prince Alwaleed Bin Talal – the Saudi prince best known as Citigroup's largest private shareholder – has corresponded with Warren Buffett in secret for the past 11 years in search of investment advice.[/i]
[quote]In one of the letters, the Saudi prince, one of the world's richest men with a fortune estimated by Forbes last month to be $19.4bn (£12.6bn) told the "Sage of Omaha" he would be "pleased to consider participating in any of [strike]your legendary Omaha orgies[/strike] you future investments that you may deem pertinent."

The intriguing exchange, revealed in the latest edition of Bloomberg Markets magazine, began after the pair met in 1999, at the Plaza Hotel in New York, in which Alwaleed owned a 42pc stake.

The correspondence began with a letter from Mr Buffett – whose fortune is estimated by Forbes to be $42bn - praising Alwaleed for the restoring the hotel to its "former luster", with the Prince responding a month later.

Since then, the duo have corresponded at least seven times – by mail and fax.

The article also points out that although Alwaleed often refers to himself as the [strike]Arabian Stallion[/strike] "Buffett of Arabia", the comparison doesn't stand given his fortune has fallen by $2bn in the last decade, while Buffett's has more than doubled.
[b]
In good humour, Mr Buffett even jokes in one of the exchanges that "in Omaha I'm known as the [strike]Avuncular Harem Jockey[/strike] 'Alwaleed of America' – which is quite a compliment."[/b][/quote]
[i]My Comment:[/i] If you two boys simply cannot manage to keep your hands off each other, I am going to have to insist that you get a hotel room so you can conduct your affair in private. And it`s going to have to be our special sound-proof "Man-love suite", because the last time you two shared a room, we had numerous complaints from other guests on the same floor about the sounds of noisy [strike]spanking[/strike] banking going on until the wee hours.


[b]Chris Dodd`s Financial "Reform" Bill and other Swiss cheeses:[/b]

The [i]NY Post[/i] points out some interesting exceptions and other loopholes in the Dodd financial-reform bill:

[url=http://www.nypost.com/p/news/opinion/opedcolumnists/chris_dodd_carve_outs_for_cronies_MT1U7GBEPvzX3QXProqC9L]Chris Dodd's carve-outs for cronies[/url]: [i]The financial-regulatory bill now before the Senate is so filled with special-interest loopholes and exclusions that it makes the health-care "reform" bill, with its "Cornhusker Kickback" and "Louisiana Purchase," look like a model of rectitude.[/i]
[quote]The Senate bill, sponsored by Democrat Chris Dodd, claims to subject all "too big to fail" institutions to greater federal supervision, but in fact it only mandates such regulation for bank-holding companies. Regulators would have to make a case-by-case decision on whether to apply it to other financial companies.

That`s no minor oversight, because insurance companies, like AIG, tend to have thrift charters rather than bank charters. So, as the bill stands now, AIG and other insurers that accepted massive bailout funds, such as The Hartford, would not be automatically covered. That`s a head-scratcher only if you forget that most insurance companies reside in Dodd`s home state, Connecticut.
[b]
But the section of the bill most littered with exemptions is probably the proposed consumer-protection bureau. In some instances, these exclusions actually roll back existing consumer protections.[/b]

Remember the mortgage crisis? Well, the primary consumer-protection law for homebuyers is the 1974 Real Estate Settlement Procedures Act. The law requires the timely, accurate disclosure of relevant closing costs and prohibits "kickbacks" for the steering of settlement services.

For example, your real-estate agent cannot, under RESPA, be paid a fee for steering you toward a certain home inspector, title company or other closing service. Yet, under the Dodd bill, real-estate agents would be exempted from RESPA. If that weren`t bad enough, the Dodd bill exempts insurers and attorneys -- both now subject to RESPA -- from its consumer protections, too.

Having spent some time running the RESPA office at US Department of Housing and Urban Development, I can tell you its biggest lawbreakers are title-company and real-estate agents. [b]It`s hard not to conclude that having the largest political-action committee in Washington has turned out to be a smart move for the National Association of Realtors[/b].

Attorneys, insurers and real-estate agents aren`t the only ones exempted from the bill`s consumer-protection provisions. The Farm Credit System, a government-sponsored lender that directly competes with banks, is excluded, too. Perhaps this should come as no surprise, because Fannie Mae and Freddie Mac, those crackerjack institutions at the heart of the mortgage meltdown, are also exempt. Worse yet is that Wall Street is exempted from the reach of the proposed consumer-protection agency -- its regulation will remain with the Securities and Exchange Commission, which proved itself asleep at the switch during this last period of financial shenanigans.

President Obama proclaimed in his finger-wagging at Cooper Union last week that "unless your business model depends on bilking people, there is little to fear from these rules." If that`s true, then I ask the president: Why not apply these rules to everyone?

It would be bad enough if the special-interest carve-outs ended there.

Deep in Sen. Blanche Lincoln`s (D-Ark.) bill, passed by the Agriculture Committee last week (it will be merged with the Dodd bill), are [b]exemptions to rules mandating transparency in the trading of complex financial derivatives, such as the credit-default swaps that figured so prominently in the Wall Street meltdown[/b]. One of the most troubling is Sen. Debbie Stabenow`s (D-Mich.) amendment that would exclude the captive finance arms of certain manufacturers from the bill`s requirements that derivatives only be traded over exchanges and through a clearinghouse. Only a handful of firms would be excluded -- chief among them, of course, the automakers.

The Senate financial-regulation bill offers a stark choice: Do we aspire to be a country where everyone is subject to the same rules? Or do we accept a system where power, influence and money can buy exclusions and exemptions?

The public needs to understand that, far from protecting the little guy and sticking it to the fat cats, this bill keeps good, old-fashioned political patronage alive and well.[/quote]
[i]My Comment:[/i] I an currently awaiting a response from the Senator`s offices to my query as to how large a campaign contribution might be required in order to secure personal TBTF status for myself and my 401(k).

Greek Non-Contagion Update: Ebola, Fire, Dominoes
 

Top 3 headlines on Bloomberg [url=http://www.bloomberg.com/news/regions/europe.html]Europe page[/url] pretty much sum up the spreading "completely contained non-contagion" - the estimates of monies required keep rising as well. In desperation for the appropriate contagion metaphor, various pols and pundits have resorted to trotting out the names of dreaded infectious diseases, sometimes with unintentionally hilarious results, as the snip beneath the first-article link demonstrates:

[url=http://www.bloomberg.com/apps/news?pid=20601085&sid=aoEjq.BGmM2o]Merkel Vows Faster Greek Aid as Spain Downgrade Highlights Debt Contagion[/url]: [i]German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis as Standard & Poor’s downgraded Spain and investors sold bonds in Europe’s most indebted nations.[/i]
[quote]Contagion from the Greek crisis is “threatening the stability of the financial system,” Organization for Economic Cooperation and Development Secretary General Angel Gurria said in an interview with Bloomberg Television in Berlin today. [b]“This is like Ebola. When you realize you have it you have to cut your leg off in order to survive.”[/b][/quote]
[i]My Comment:[/i] Ah, no, that would be gangrene for which emergency amputation might be called for. Any sort of flesh-cutting would be contra-indicated for Ebola victims, since the chief cause of death from it and similar hemorrhagic fevers is literally [url=http://en.wikipedia.org/wiki/Ebola]bleeding out[/url].


[url=http://www.bloomberg.com/apps/news?pid=20601085&sid=a6AYdnnGl5kw]Greece Turning Viral Sparks Search for EU Solutions as Aid Estimates Surge[/url]: [i]European policy makers may need to provide as much as 600 billion euros ($794 billion) in aid or buy government bonds if they are to stamp out the region’s spreading fiscal crisis, said economists at Goldman Sachs Group Inc., JPMorgan Chase & Co. and Royal Bank of Scotland Group Plc.[/i]
[quote]Some economists are optimistic that market turmoil will ultimately force politicians and central bankers to do what’s necessary to rescue the euro region.

Eric Kraus, a strategist at Otkritie Financial Co. in Moscow, said he’s buying Greek bonds on the bet policy makers will eventually strike back.

[b]“Sooner or later those morons in Brussels and Berlin will realize that they are playing with fire, have already been burned, and will have to stop feeding the flames,”[/b] said Kraus, who works at a brokerage part-owned by Russia’s second-biggest bank. “Then we should see a very nice bounce.”[/quote]
[i]My Comment:[/i] Let me guess ... "This Ebola financial contagion is like playing with fire. When you realize you`ve been burned you have to cut your leg off in order to survive." Did I get that right? Anyway, there`s a very real possibility that the moron who ends up getting burned here may be Mr. Kraus himself.


[url=http://www.bloomberg.com/apps/news?pid=20601085&sid=a_1DWmyIARfA]Euro Drops to One-Year Low Versus Dollar as S&P Cuts Spain's Debt Rating[/url]: [i]The euro reached a one-year low against the dollar as Standard & Poor’s cut the debt rating of Spain in a sign the European deficit crisis is spreading.[/i]
[quote]“The European fiscal authorities have let the situation get out of hand, and there’s a wholesale loss of confidence by investors,” said Boris Schlossberg, director of currency research at online currency trader GFT Forex in New York. [b]“The dominoes are falling one by one.”[/b][/quote]
[i]My Comment:[/i] Wait, don`t tell me ... "This Ebola financial contagion is like playing with a roomful of dominoes on fire. When the dominoes start to fall you realize you`ve been burned you have to cut your leg off in order to survive."

Russia is sweating in its skivvies.

Yes, you got it. It is OIL.


Consider that Russia has recently insisted that major oil transactions be made in Euros to avoid the weak dollar. Now the Euro is rolling downhill like a snowball headed into a volcano. What do you think happens to Russia's Euro denominated oil trades?

So keep your eyes open over the next few weeks for a slightly stronger dollar and for the market in euro denominated oil trades to skid.

DarJones