AS PREDICTED

The WSJ had as its lead story today the fall-out from the thug Lawsky's actions against Standard Chartered and it wasn't pretty reading.  The Brits are screaming mad as well they should be and talks of retaliation are in the air.  I would rather not be the CEO of a non-American bank these days as I would have no idea to whom to listen and in what manner the game is being played.  There are far too many regulators and many are not professionals but rather political thugs looking to score quick points.  In the not-too-distant-future look for legislation placing the regulation of all foreign banks in the hands of the Feds or the Federal Reserve.  This being an election year and Cuomo and Lawsky being Democrats the Administration will give this one a pass but no matter which party wins in November, international pressures--and not just from Europe--will bring about the change in governance of which I am speaking.  The State of New York, having been run for years by political hacks may have just killed the goose with the bright, shiny egg.

Now remember my writing at one point that if you wish to learn the intentions of this Administration simply read the New York Times on a daily basis where you will find in addition to "All the News That's Fit To Print' (in accordance with our political philosophy) what to expect from Washington.  This morning, once again shilling for the Administration, the NYT let it be known that Mr. Corzine will probably skate on any criminal prosecution for his role in the MF Global disaster.  No kidding.  After having this thing slow-walked by his former partner, now regulator, Gary Gensler, treated to the astonishing--or so it would appear--actions of the Federal prosecutors who did not grant immunity to the company's treasury official who authorized the transfers without even asking for a proffer and not even being questioned in regard to his 10-K statements, Johnny-boy is happily trading his family money seemingly without a care in the world.

To say this stinks is an understatement but let us remember that Corzine was the no.1 fund raiser for The Leader and was the odds-on favorite to succeed The Suit in the second Obama administration if there is to be one.  Probably the only good thing to come out of this may be the realization that the piece of garbage known as Sarbanes/Oxley isn't worth the paper on which it is printed.  Keep in mind that if one signs a 10-K it makes no difference if a material misstatement of fact is deliberate or accidental; sign it and you're toast.  It's a joke, can it and while one is at it perhaps the repeal of Dodd/Frank can be accomplished as well.  This dual act of contrition may mark the finest moment in financial regulation since...hold on, I'll have to back to you tomorrow on that.  Then again, the research may take a long time.

UH-OH

Houston, we have a problem.  Methinks folks are beginning to figure it out.  Todaywas not a good day; it was a worse day than I suspect most people realize.  Economic numbers over here continue to deteriorate; ditto for Euroland.  The Troika is on it's way to Greece to tell them the till is empty and the bridge loan they were looking for to get them to the next bridge loan to get them to...oh, what's the difference, as I have said no one cares any more.  Then there's Sr. Monti who was doing rather well until he saw fit to tell the world that he has a real problem with La Sigilia about whom everyone has forgotten and badda-bing the ten year goes to 6.50%.  Politicians really should learn to keep their mouths shut especially when the problems of the island pale in comparison to the structural issues he must solve in the entire economy in order to make this thing work, and so far, try as he might, the 60 year imbedded bureaucracy of the Italian state has fought him at every turn.  No matter perhaps, as it was pointed out last week Italy, with the lowest birth rate by far of any country in Euroland and perhaps the world, Italy might run out of Italians in 100 years.  Problem solved.  Perhaps a tax on any Italian male who continues to live with his mother after the age of 25 might work?  It sure would bring in a bunch of money.  Mario should consult with The Leader; he knows a lot about taxes.

As dicey as things are beginning to look in Italy, Spain is sliding closer to the brink and unfortunately those who just a week ago were rejoycing in a deal that would save the banking system and not impinge upon Spain's debt burden took a second look and figured out the point that this space has been trying to make that at the end of the day the credit extended to the banks becomes the obligation of the State if the banks cannot repay.  As the funds are guaranteed to go right out the door a nano-second after they arrive, this is a real possibility.  The ninnies who write about this stuff missed all of that and what they also missed is the fact that like the relationship between the Italian State and Sicily, Spain has its own autonomous states and regions to whom the State has financial obligations and who are broke.  A couple of them rose last week from where they were hiding in plain sight and Badda-boom, the price of poker in Euroland just went up...to 7.53%  in the ten year.  Unsustainable.

Immediately, of course, increased cries for a Eurobond rose up once again.  Memo to the town criers:  NO BOD EE will buy the damn thing.  Forget it and go away to think of something els...or better yet just go away.  Would it work?  In theory of course but I keep coming back to the Yogi-man: "In theory, theory and practice are the same; in practice they aint..." which I have been informed if the correct quote.  Fortunately, here come the Olympics and all of Europe will be caught up in that and especially the Spanish whose soccer team will be trying to do what no other national side has ever done: win the World Cup, the European Cup and the Olympics back to back to back.  Spectacles for the masses.  Ave Caesar!  Morituri te salutant!  Round 2 of the Bond Holders vs. the Lions.  Thumbs down for everyone.  Tomorrow we see what else the geniuses have figured out.

                                                   _______________________________

Just when you think it has reached the highest level of stupidity, the New York Times out does itself in it's leading article today.  Libor was the subject and the Times nearly (figuratively) wet it's pants in revealing the the Justice Department is all over the banks. More importantly, however, the Times excoriated The Suit and demanded that he recuse himself from any investigation conducted by the Treasury.  The Times than suggeated that in the next Obama administration The Suit be replaced by Garl Gensler.

Now Mr. Gensler is a very smart guy...the youngest partner ever made by...you guessed it...Goldman Sachs.  He is also the head of the Commodities Futures Trading Commission, best buddies with John Corzine of MF Global fame (who is still walking about as a free man) and the guy who missed the shenanagans at PFG Best and about whom it can be said (and has been) that some of his greatest successes at Goldie can be found under a rock.

The Times was on a roll.  On the op-ed page Little Paulie has a completely nonsensical piece on global warming, but the star of the day was Gar Alperovitz of the University of Maryland.  Briefly, his deal was banks are too big to be regulated so nationalize the banks...and let the government manage them!  Now you can look ol' Gar up and you will find that there are a hell of a lot of people who not only don't like him, disagree with him and in a couple of case accuse him of fradulent scholaship.  Who knows, but one thing you should know is that he is highly regarded by The Leader.    Take this article seriously.  It is a message from the Times as to this administration's thinking in phase 2.  Scary.

TIRED

Haven't written as much as I did yesterday in a long time.  Flat wore me out but things were quiet today so I can goof off a bit.

The Bair of very little brain was at it again today on CNBC.  Libor of course.  Girl never misses a chance to be lastest with the leastest. According to her we are going to hear more of this; not c. 2008 but about the goings on in 2005...or thereabouts.  Great.  The system needs more bug-eyed anticipation of activities of seven years past assuming there is any evidence to be found at this stage of the game.  I think she runs something call the Pew Trust about which I know nothing except that if she stays there for a while it will become known as the Phew Trust.  Woman is hopeless.

Six hour cabinet meeting in Spain the other day.  PM told the assembled that things might be a tad worse than he had led them to believe...well, perhaps even worse than that.  Taxes would be raised, a goodly part of the banking system might be essentially run by Brussels, the cost of the bank recap is now around 125 billion (don't say I didn't tell you) and oh, Mr. Depositor, remember those "bonds"  that your banker talked you into buying?  Guess what?  IT'S SUBORDINATED DEBT!  You lose!  Law suits all over; it looks like the U.S.A. , and now there is talk of a full fledged bail-out if things don't turn around quickly.   Earth to Prime Minister:  things are not going to turn around, so the riots outside the parliament yesterday?  Get used to them, I'm afraid we are going to see more of them.

Another commodity-related firm tanked the other day under strange circumstances and missing a ton of customer funds while the head guy tried to off himself.  Didn't do a good job of that either.  Remember Gary Gensler the Democratic operative who was placed in charge of the CFTC and who, being such a genius and thoroughly knowledgeable of all things financial was going to preven these sorts of things from happening?  Well, he's now O for 2 and his great buddy John Corzine is still walking around scot free.  Over a billion dollars stolen and Poo Bair is worried about Libor.  Some day I'll figure this all out but not today.  I'm too tired.

WITH A WHIMPER

Which is the way the week ended except for the remarkable scene in the House of Representatives today where, as predicted, the MF GLOBAL affair took on a whole new dimention.  With a large bi-partisian vote, the House Agricultural sub commitee issued a subpoena for Jon Corzine to appear before it on December 8.  Now for the non-American readers and for those who are not political junkies--which is about 99% of you--the Congress has not subpoened a sitting or retired U.S. Senator in over 100 years; this is no small thing.  When they turn on their own it's big.  It is ironic as well that this action took place of the tenth anniversary of the bankruptcy of Enron, which led to Sarbanes-Oxley which was designed specifically to make transparent corporate balance sheets, which was written in part by Gary Gensler, who was the regulator for MF GLOBAL, whose accounting shenagans in the purchase of Euro debt led to its bankruptcy, whose...oh bother.  This is going to be fun to watch.

Unfortunately, Corzine is supposed to testify on the same day as the big Euro-leaders pow-wow next which is not great timing for yours truly.  I wonder if there's a finance bar in the neighborhood with 10 televisions carrying the important stuff of the day?  I'll have to start searching.  If there isn't I might start on...probably make a fortune.  Anyway, next week is the week to watch beginning with the Nick and Angie show on Monday which should be a real crowd pleaser, moving on to the Group of 27 and concluding with the Corzine pinata on Capitol Hill.  I can barely keep still. The betting window is now open on whether Jersey City Johnny takes the Fifth which means he avails himself of his Constitutional right not to testify.  THAT would be a show-stopper.  And since nothing else of importance went on today I'm going to rest up for next week with a Softly as I Leave You tip of the Fedora to Carter for being more and more creative as we travel along this long, long road.

See you next week.

Queen?

Weird dude that Carter.  I think he's playing with my head. If he threw a little Sinatra at me that would be fine.  I'm cool with Irish poets.  But Queen?  I don't even know WHAT Queen is.  Male?  Female?  Confused?  Anyway, he's right about yesterday's events and for once we are in agreement.  Nothing has really changed and Euroland continues to spiral down into an ever-deepening abyss, and yet...

I tried to ring Massimo today at all his usual haunts, ma, non che.  The reason was I was listening to Mario Draghi today, speaking in rather good English to some Euro group (which must have enraged the Frenchies),  and while I may be a bit too aware of existing, or for that matter non-existing nuances in speeches like this I couldn't help thinking back to what Massimo postulated a few weeks back that after an appropriate period of time and with the right political statements and moves, the ECB would be there for Italy in the end.  To me it seemed that that was exactly what he was saying.   He wants the Pols to exhaust all of their efforts and then--but only then--will he bend the rules.  So I said to myself, "Self, you just may have hit this one right on the head."  The Central Banks' move of yesterday can probably keep a lid on the Eurobanks until after the Heads of State meeting in a week or so and probably into next year and if those geniuses say the right things and take what steps they can, in comes Mario on his Chariot of Fire to save the continent.  Just like Massimo predicted.  Now I wouldn't go long on Euro sovereigns like Johnny Corzine in anticipation of this event occuring, but I think they are trying to design the game plan so it works out that way.  Oh sure, the Germans are going to get their pound (or 454g) of fleisch but that's not much to give away as everybody will simply ignore it after they get by this mess.  Or so the thinking goes and maybe Frau Merkel holds on to her job and M. Sarkozy gets re-elected...and maybe not.  Enough of this for today.

The Senate today held hearings on L'Affair MF Global and the troops came loaded for bear.  Problem was the bear decided he wasn't about to participate in the event.  Gary Gensler, Head of the Commodities Trading Commission, decided to "recuse" himself from the proceedings and while he dodged and weaved in answering questions there can be little doubt that this Dodd/Frank mini monstrosity participated in a monumental failure of oversight along with the SEC whose boss, Mary Shapiro was at the same hearing.  Mr. Gensler's recusal was because of his long association with John Corzine going back to his days at Goldman Sachs--that name AGAIN--and his friendship throughout the years duing which they were heavily involved in Democratic Party politics and hugh fund raisers for the cause.  We'll get into the details of what occured at a later date but right now IMHO if one or more of this motley crew doesn't wind up in the slammer we might as well just fold our tents.  I have a feeling that this is going to become a major event because of the political associations and the upcoming election as it should, with both sides of the aisle willing to dig very hard as no one will want to be on the wrong side of what more and more appears to be a fraud of major proportions.  Unfortunately, MF Global had been granted earlier in the year the status of primary dealer by the New York Fed (that status being revoked as the affair was unfolding)  and of course Bill Dudley the Fed's President was a colleague at Goldman Sachs as well.  You know what that will mean; it's going to get ugly.  So I suppose it's proper to ask: "Carter.  Got any music for this one?"