Monthly Archives: April 2012
“Brazil signaled it may cut its benchmark interest rate to a record low as a still “fragile” global economy eases inflationary pressures in the world’s sixth-biggest economy.
The bank, in a statement accompanying its decision last night to lower the Selic rate by 75 basis points to 9 percent, said risks of missing its 4.5 percent inflation target are “limited” as the global outlook remains “disinflationary.” In the minutes to their meeting last month, the bank said borrowing costs would probably stabilize “slightly above” the record low 8.75 percent…”Comments »
“Surging unemployment rates from Spain to Italy and Greece are threatening efforts to quell the region’s debt crisis and keeping bond yields close to record premiums relative to benchmark German bunds.
Joblessness is soaring as European nations reduce spending, igniting strikes and protests fromAthens to Madrid. Unemployment in Spain surged to almost 24 percent, pushing the euro-region level to 10.8 percent in February, the highest in more than 14 years. Italy’s rate is at 9.3 percent, the most since 2001, hampering efforts to spur economic growth.
Deepening recessions in Italy and Spain contributed to a five-week slide in Italian and Spanish bonds as the shrinking tax base helped lead to both countries raising their deficit targets. The yield premium investors demand to hold Spanish 10- year debt over German bunds reached a four-and-a-half-month high this week.
“The higher the jobless rate, the more that has to be spent on benefits, creating the potential for a negative spiral,” saidChristian Schulz, an economist at Berenberg Bank in London and a former ECB official.
Berenberg Bank predicts euro-region unemployment will peak at 11.5 percent in September, he said….”Comments »
“China’s central bank pledged to ensure adequate availability of cash in the financial system by using tools including reductions in the reserve-requirement ratio, state media reported.
Authorities will “appropriately take targeted liquidity management actions” based on circumstances including foreign- capital inflows and funding demand, the official Xinhua News Agency said in a report late yesterday on an interview with an unidentified person at the People’s Bank of China. Options include adding cash through reverse-repurchase operations and cutting required reserves, Xinhua said….”Comments »
Everyone in the country has heard of Trayvon Martin and George Zimmerman but few know the name of Trevor Dooley–a central Florida man who shot and killed a neighbor, David “DJ” James, and is defending himself using Florida’s Stand Your Ground law.
The James case has a number of similarities with the Martin case, but has not been the subject of the mainstream media meltdown nor the focus of cries of racism, even though the shooter and the victim were both of different races (Dooley is black, and James was white).
Read the rest here.Comments »
[youtube://http://www.youtube.com/watch?v=5k3JVfxluFU 450 300] Comments »
It is very shallow for an ‘icon / role model’ to say “leave your politics at the door when it comes to investing.”
Politics is everything and your behavior should follow your beliefs. Otherwise, your word is not your bond and no matter how famous or rich you become; you end up being a big fat zero leaving no real positive impression on humanity.
It is one thing to make mistakes, but it is entirely another to ignore them.Comments »
The SEC & CFTC gives in to watered down regulation over swaps. Does anyone have gonads anymore?
“Corporate America, with help from the Obama administration, has struck yet another blow against the scary financial regulations it claims will hurt the economy.
On Wednesday they undercut new regulations on derivatives, which the detail-obsessed among us might point out didn’t just hurt the economy but nearly destroyed it. Just a few years ago.
It’s just the latest in a growing string of defeats and surrenders by regulators to the same financial industry that helped nearly destroy the economy, and needed massive bailouts as a result. Just a few years ago.
Under heavy pressure from the energy industry and other corporate interests, the Commodity Futures Trading Commission and the Securities and Exchange Commission are retreating from a plan to regulate many reaches of the U.S. trade in financial derivatives known as swaps, including the credit derivatives that nearly brought down the financial system.
The CFTC and SEC voted on Wednesday to decide just who, exactly, should be considered a “swap dealer” in this market. Dealers will be subjected to greater regulation and oversight. Non-dealers get a pass.
Originally these regulators wanted to say that anybody who handled less than $100 million in swaps per year was not a dealer and thus would be exempt from regulatory oversight. This arbitrary number was far, far too low, cried energy companies and other players in the swaps market. After careful consideration, they thought another arbitrary number, say $3 billion, or maybe $8 billion, would be more reasonable.
These companies argued that they dealt in many billions of dollars in swap trades each year — $3 billion to $8 billion, to be ridiculously precise — just to hedge their risks of doing business. To subject their trades to the scrutiny of regulators would impose terrible costs that could very well hurt the economic recovery, for goodness’ sake.
These groups, using a large and well-supplied army of lobbyists, as Ben Protess of the New York Times noted, cried to regulators that $3 billion — no make that $8 billion — was the absolute level of trades that turned one from an innocent bystander in the swaps market into a “dealer” in need of regulation.
And the regulators listened, bless ’em, continuing a recent string of victories for the banking industry, among others, to roll back or confuse regulations passed in the wake of that pesky financial crisis.
Not only did they make it easier for a swaps trader to be exempt from regulation, but they also left it up to individual companies to decide whether their swaps trades were commercial “hedges,”which would also get them off the regulatory hook, Reuters notes.
“This rule is an indefensible defeat for financial reform,” Better Markets, a non-profit advocacy group, wrote on its blog on Wednesday. “It is also a poster child for the pernicious effect of industry’s army of lobbyists and the influence that the financial industry has at the regulatory agencies.”
Americans for Financial Reform, another advocacy group, wrote on Tuesday, in urging the SEC not to raise the trading limit for swaps dealer exceptions:
Under an $8 billion de minimis exemption, a swaps entity could advertise itself as a dealer to the market and conduct 1,600 such transactions a year, without any requirement to register with the either the SEC or the CFTC. Commodity companies able to take advantage of the hedge exemption, or hedge funds and commodity trading desks able to use a possible own book trading exemption, could expand even further without designation.
The regulators argue that an $8 billion limit for swaps dealers will capture all of the too-big-to-fail banks and the bulk of swaps trading in the U.S., and they may yet lower the bar back down to the other arbitrary number floated by the industry, $3 billion.
But Wednesday’s failure follows the JOBS Act, pushed by President Obama himself, which will strip away investor protections in the name of addressing an imaginary crisis of small companies being unable to raise money from investors in private or public markets.
Then there was H.R. 3283, a bill that would create a massive loophole to let banks trade derivatives without having to hold extra capital to protect against losses. That bill is still out there waiting to be passed.
Then there is the banking industry’s constant, withering assault on the Volcker Rule forbidding banks from taking risky bets with their own money, which banks say is a necessary part of hedging their risks, sort of like the swaps market. As Jesse Eisinger of ProPublica writes today, lobbyists and complicit regulators have managed to so confuse the issue that they have rendered the Volcker Rule meaningless.
What all of these retreats have in common — and this is not an exhaustive list — is an industry successfully pleading to the government to loosen some of the fetters placed on them after their past jaw-dropping acts of malfeasance, all in the name of avoiding the hazily defined “costs” such regulations could impose on the economy.
What’s lost is that these “costs” are almost certainly not going to be higher than the cost of, say, bailing out the entire banking industry, as we have had to do once before and likely will be asked to do again, at the rate we’re going. The costs of regulation might not even be higher than the cost of simply bailing out one insurance company, American International Group, which nearly got itself annihilated by massive positions in the very swaps market regulators are taking a pass on fully regulating now.”Comments »
“The Bank of Spain plans to auction between €1.5 and €2.5 million ($1.9 and $3.3 million) in bonds of 2.5 and 10 year securities tomorrow.
But financial media and investors are going nuts over this auction—as opposed to a sale of short-term bond auction on Tuesday—because of the maturity of debt Spain is selling.
As we pointed out earlier today, Spain has issued far more short-term debt than long-term debt, pandering to the cheap cash banks have because of the European Central Bank’s two three-year long-term refinancing operations. In fact, the Bank of Spain even issued a memorandum earlier this year (via @trumanfactor) giving it the ability to issue debt in new denominations that might coincide more favorably with investor demand.
Thus, Spain’s ability to sell 2.5-year securities that mature before the LTRO expires will be vital to how well Spain can weather the storm around its banks. Poor results on the 2.5-year auction would signal that investors are already ignoring the positive impact of the LTRO, and that Spain’s sovereign debt situation is about to get a whole lot worse.
Simone Foxman for Business Insider/Bloomberg Data
This year (green), Spain has been borrowing far more debt with shorter maturity than it normally has by this date.
NOT CONVINCED? READ: This Is The Number You Need To Be Watching In Spain >”Comments »
“The New York Times’ Will Neumann has scored an interview with one of the Colombian prostitutes involved in the scandal that is rocking the Secret Service.
We don’t have a name but we have some of the key details.
- She’s 24 and a single mother.
- “They never told me they were with Obama,” she said. “They were very discreet.”
- She considered herself an escort, not a hooker. And referred to the differences of status between a Blackberry and an iPhone to distinguish between the two.
- The Secret Service agent offered to pay her $30 at the end of their tryst, when they had agreed on $800.
- When she was disgusted with that offer–he claimed he was drunk during the original negotiation–a friend of hers got involved and that is when the argument that blew the lid off the night’s activities began.
- She eventually lowered her demand to something like $250, which is what she has to pay the man who finds her clients.
- She said she understood that some of the men may have thought they were not with prostitutes.
The article is short on details, but here is a bit of the flavor:
She was dismayed, she said, that the news reports have described her as a prostitute as though she walked the streets picking up just anyone.
“It’s the same but it’s different,” she said, indicating that she is much more selective about her clients and charges much more than a streetwalker. “It’s like when you buy a fine rum or a BlackBerry or an iPhone. They have a different price.”
Read the whole thing at The New York Times >”Comments »
Mark Gorton is sitting in the Zen garden on the roof of his office in downtown Manhattan, squinting into the sunlight and telling me he’s not evil.
“If you listen to some of the rhetoric in the press recently, you’d think we were killing babies,” Gorton says, in between sips of organic blood-orange soda as he leans forward in a wicker chair. He’s upset that his business is being “tarred” by the bad publicity plaguing the rest of Wall Street. “What we’re doing is a net positive for the world.”
This is an interesting complaint because in many ways Mark Gorton is the new face of Wall Street. Gorton is a high-frequency trader. His company, Tower Research Capital LLC, with its 275-person global staff of engineers and computer science and physics majors, is part of an industry that today is responsible for more than half of all stock trading in the United States, according to the Tabb Group, a financial markets research and strategic advisory firm. Gorton’s is an industry under scrutiny.
Read the rest here.Comments »