This A.M.: Senate Health-Care Bill Bails Out Insurors; Lehman Disaster Haunts Schools, Cities; Madoff Delivers Another 'Fuck You'

Americans Plan to Limit Spending on Recovery Concern (Bloomberg)

Wall Street's pissed at you for not wanting to spend more money during the recession.


Pen to paper: Will Madoff make him rich? (Philadelphia Daily News)

K.C. White sketched a portrait of fellow convict Bernie Madoff in the Butner, N.C., federal pen and hopes to peddle it. Its title? "Fuck My Victims." The recently freed White says Madoff autographed it for him and told him, "I made them millions of dollars. I'm doing 150 years. Fuck my victims."


The Specter of Lehman Shadows Trade Partners (WSJ)

"The ghost of Lehman Brothers' derivatives business is haunting hundreds of schools, municipalities and companies, which remain entangled in financial transactions with the failed firm."


Volcker Sees 'Long Slog' for U.S. Economy, Seeks Bank Limits (Bloomberg)

Pushing way harder than the Obama administration for limits on trading in risky capital markets by "too-big-to-fail" banks, which is why the Obama administration has marginalized the old codger.


U.S. Stock-Index Futures Advance; Citigroup, Nucor Shares Gain (Bloomberg)


Cuomo Calls In 5 BofA Directors (WSJ)

NY's AG issues subpoenas, scaring the shit out of board members across the country.


Next Up: Dow 10,000? Does Anyone Care? (Seeking Alpha)

When it happens, you'll see big, bold headlines, but not that big a deal. The S&P 500 passing 1,000 — now that was big.

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This A.M.: Recession Over, Bernanke Says; Celebration Starts in Unemployment Lines; Senate Floats Health-Care Trial Balloon

Bernanke: Recession 'Likely Over' (WSJ)

Says it's over "from a technical perspective," though unemployment, a predictor and result of recession, is still increasing and up to 10 percent. More than 5 million Americans lost their jobs from December 2007 through March 2009. Now it's up to Americans who still have jobs to spend more money to pull Wall Street completely free of the recession.


Is the Recession Really Over? (Seeking Alpha, Jeff Miller)

"The announcement marks the start of a new 'silly season' where people argue about recession dating, and misconstrue statements, taking them out of context."


Vance Is Winner in Primary Vote to Replace Morgenthau (NYT)

Son of a powerful international pol (Cyrus Vance) succeeds the son of a powerful international pol (Henry Morgenthau Jr.). None of the three candidates for Manhattan D.A. (Cy Jr., Leslie Crocker Snyder, Richard Aborn) seemed to give a damn about Wall Street shenanigans or other white-collar crime, so it'll be business as usual.


Return of Day Traders Drives Rise in Volume (WSJ)

They're trying to cash in on volatile financial stocks, while the big, long-term money stays on the sidelines.


Senate Health Bill Draws Fire on Both Sides (NYT)

Liberals and conservatives hate it, so it might be pretty good.


Allen Stanford claims he cannot afford a lawyer (Times U.K.)

Thin and unshaven like an anorectic supermodel guy, Sir Allen cuts quite a figure in his off-the-rack classic orange prison jumpsuit. Forget about the pro bono stuff: High-priced firm Patton Boggs will represent him only if an insurance policy covering Stanford is applicable. In the meantime, a Houston public defender is stuck with the deadbeat.


Diamonds Post-Lehman Have No Aura (Bloomberg)

Speaking of the collapsed diamond-market bubble, Boston investment banker Christopher Ellis says:

"It is possible to pull too many diamonds out of the ground and cut and polish too many of them and try to cram them down the gullets of the American customer. It's like making foie gras. You wind up with a very unhappy goose."


Tories accuse Gordon Brown of lying to Parliament on cuts (Times U.K.)

Historically rude pols in parliamentary democracies have no problem with accusations of lies and other telling-it-like-it-is. Apparently, neither does at least one American: Barack Obama called Kanye West a "jackass."


A Derivatives Myth Exposed (Seeking Alpha, Jeff Nielson)

Fascinating, fear-mongering assessment of the global derivatives market, the bankers' private "casino," which has an extremely shaky, "notional" value of $1.1 quadrillion, which Nielson notes is more than 20 times the size of the entire global economy.

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This A.M.: Don't Tread on Me, U.S. Says to China; Press Observes Lehman Anniversary With Moment of Chatter


Tariff on Tires to Cost Consumers (WSJ)

Trade war escalates after U.S. puts sanctions on importation of cheapo Chinese tires. Deflating news for U.S. consumers, because the cheapos are "the bulk" of the 46 million Chinese tires that annually invade America and make up 17 percent of all tires sold here.


Trial and Error Helped Stem Panic (WSJ)

"... debate continues on which of interventions made the biggest difference."


The Hard Truth About Financial Regulation (Forbes, Liz Moyer)

Lots of "talk and hand wringing," but "little real progress on how, or if."


Police Eye Mysterious Death of Financier (WSJ)

Facing fraud charges after the WSJ uncovered what looks like a huge Ponzi, Danny Pang — Taiwan's version of Bernie Madoff, but he denies it — may have committed suicide. More tragically, body of missing Yale bride-to-be Annie Le is reportedly found. Original WSJ investigative piece on Danny Pang here.


Fevers rise over paid-sick-day bill (NY Post)

"Convincing infected workers to stay home is key to controlling the spread of swine flu. But it can be a tough sell for those who don't get paid sick days -- an estimated 1 million city workers."


Top economist: Things are worse (NY Post)

Not just your average schmo, this is Joseph Stiglitz talking. He "echoes" what Paul Volcker (marginalized by Barack Obama) has said. Stiglitz pissed that Obama crew is wary of challenging financial industry: "It's an outrage. ... The administration seems very reluctant to do what is necessary." Obama's coming to Wall Street today to supposedly "try to breathe new life into efforts to overhaul the financial regulatory system," the Washington Post says. But with pals of Wall Street like Tim Geithner and Larry Summers in his top crew, don't count on anything beyond show.

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This A.M.: Wall Street Out of ICU; Public Critical; Obama Health Plan Ailing; Fashion Mags Starving


Key Feature Of Obama Health Plan May Be Out (WashPost)

"White House may be willing to jettison a controversial government-run insurance plan favored by liberals."


Citigroup May Shift Phibro Trader Hall's Pay to Stock From Cash (Bloomberg)

Regular investors don't think much of Citigroup stock right now (it fell 3.9 percent this morning in early NY trading), and energy trader Andy Hall got $100 million last year, so why should he do this? Traders like Hall don't have to disclose their compensation and don't fall under the aegis of pay czar Ken Feinberg, so the feds may have to send some leg-breakers to Hall's mansion.


Thick Fashion Magazines Are So Last Year (WSJ)

Advertisers not only suddenly frugal but also increasingly turning to the Web. Uh-oh. The Internet virus is spreading from the newspaper industry (which started to waste away before the recession) to the slicks.


A Detailed Look At The Stratified U.S. Consumer (Zero Hedge, Tyler Durden)

Extremely long and extremely interesting analysis of why most of you are fucked.


Wall Street Stimulus Buoys Continental Airlines, Prudential, Goldman Sachs (Bloomberg)

The S&P 500 "has soared 48 percent since it reached a 13-year low on March 9." That says something about the manic-depressive economy. Read the rest of this overview by Michael J. Moore. Goldman's equities revenue was up 59 percent over the first quarter, Wall Street firms have raked in $4.2 billion in underwriting fees because of all the action. The rally bolsters confidence in companies "that cater to wealthy and corporate clients." But, speaking of manic-depression, see this WSJ story: "After Dow's 42% Run, Roadblocks Looming." Lithium may be indicated.


Death of a Rally (Seeking Alpha, Alan Brochstein)

"It's easier to call the economy than stocks, and the economy has been experiencing a dead-cat bounce. I have some charts that I looked at recently, and I think that the likelihood of a normal post-recession bounce is very low."


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This p.m.: Stocks slide down the slippery slope; insights into Kosher Nostra scandal

Oil prices plunged — maybe because the speculators were too busy trying to fend off regulation during this week's CFTC hearings to manufacture a spike — and the stock market as a whole got dragged down.

As expected, the blowback from the formal announcement of the MicroHoo offensive against Google generated threats of regulatory scrutiny. And Jason Calcanis rips the deal this way: "Yahoo committed seppuku today."

Speaking of dying, the newspaper industry is not only no threat but is barely relevant to the MicroHoo/Google war. See Ken Doctor's "Microsoft-Yahoo Search Deal Leaves Newspapers on the Sidelines."

One of the better pieces on the highly entertaining Kosher Nostra sting of pols and rabbis for bribery and other business chicanery — another blow to a Jewish community reeling from momser Bernie Madoff's shanda — comes from Larry Cohler-Esses in the Jewish Daily Forward: "The Syrian-Jewish Community: Solidarity Forever or 'Medieval Minds, Armani Designs'?" Nathaniel Popper weighs in with "Ultra-Orthodox Rabbis Begin To Take Responsibility for Arrests and Scandals." As usual, the Forward tackle angles that the secular press won't touch for fear of being seen as antisemitic.

Speculators, don't beware! CFTC hearing a dog-and-pony show

How much more unjustified publicity is CFTC Chairman Gary Gensler going to reap for his supposedly firm stance against out-of-control commodities speculators?

Today, during the Commodity Futures Trading Commission's first hearing this summer, Gensler averred that his agency must "seriously consider" new limits on traders who place bets on energy contracts. The NY Times dutifully reported that that means regulators "turned up the heat" on Wall Street.

But parts of the hearing were such an exercise in PR that at one point the CFTC's general counsel advised the commission that, yes, it does have the power to set position limits. As if that were some key piece of news to Gensler. All of this is just for public consumption. There's little evidence yet that Barack Obama's crew is serious about cracking down on Wall Street's excesses. (More on the hearing here.)

For a change, loudmouth Jim Cramer is on the money when he calls the oil futures market "a total farce," a "fee machine," and a "hedge-fund playground."

The Street shudders at the very thought of regulating derivatives and other financial instruments, but its denizens don't really have anything to worry about with Gensler. A decade ago, Gensler, a former Goldman Sachs banker, fought against the regulation of credit default swaps. He hasn't done anything since to convince anyone that he's serious about regulation.

The WashPost's Zachary A. Goldfarb gave us a history lesson on Gensler last Friday that insisted Gensler is really now interested in tightening regulations. Good article, but that point — "Once an Opponent of Monitoring Derivatives, CFTC Chief Now Urges Tighter Rules" —isn't very well backed up.

The other key new regulator of the Street, namby-pamby SEC Chair Mary Schapiro, is notorious for having been soft on Wall Street miscreants. See the WSJ's story last January on Schapiro, which dubbed her "a regulator with a light touch."

Rough trade: Steamy insider tale starts with S-E-X and ends with S-E-C

Great piece in this morning's WSJ, "Insider Affair: An SEC Trial of the Heart," on how an Ernst & Young partner, James Gansman, wound up convicted of securities fraud in an insider-trading case.

All Gansman was looking for was a little illicit sex. He got much, much more. The WSJ's Dennis Berman read the transcripts of Gansman's little-publicized trial this past spring. The result is a must-read tale of hubris.

Crunch Time: 5 Top Videos on the Global Financial Crisis. (Plus One More.)

A week from today, PBS will air the first episode of The Ascent of Money, historian Niall Ferguson four-parter video takeoff on his book. But you can already watch the first episode here.

Oh, is it glib. But pretty entertaining. LibraryJournal.com's Lawrence R. Maxted includes it among the five DVDs essential to "deciphering the mortgage crisis."

The others:
House of Cards
I.O.U.S.A.: One Nation. Under Stress. In Debt.
We All Fall Down: The American Mortgage Crisis
Inside the Meltdown.

Perhaps better than those, especially because it zooms in on America's oligarchs, is the "Following the Money" episode of Bill Moyers Journal, starring Baseline Scenario's Simon Johnson. (For a good crash course on modern money, see the Baseline Scenario's "Financial Crisis for Beginners."

Back to Niall Ferguson: Check out the above video for a good a preview of Ferguson (a sparring partner of Paul Krugman's): TVO's 15-minute interview with him on The Agenda, a Toronto-based series hosted by Steve Paikin, as adroit an interviewer as Ted Koppel. Here's a snippet about the global financial crisis from the voluble Ferguson:

The United States will deal with this problem more rapidly than, say, Europe. The United States will bounce back more rapidly than, say, Japan. ... The United States is good at exporting things. It's good at exporting The Simpsons. It's good at exporting a whole bunch of stuff. It's also good at exporting crises. And right now, if you look at the global economy, although things are tough in the United States, the stock markets that are really down are India's, China's, and Russia's.

Always armed with pop-culture references, Ferguson also discourses on the relationship between democracy and capitalism, calling it "a kind of a double helix of modernity."

Market volatility: The storm before the calm?

Are we in Pamplona or Yellowstone? Are we running with the bulls or fleeing the bears?

Ben Bernanke, of course, is full of bull, whether or not he's just bullshitting. Bloomberg quotes him as saying that the stress-test results on U.S. banks "should provide considerable comfort." That's his spin on the spin — and there's so much spin that you don't know how much of a yarn you're being told.

Maybe we could judge that in a market that's less volatile. And just how volatile is the market right now?

Mark Hulbert's got an interesting take this morning on MarketWatch about how shaky current volatility indicators may be.

The Chicago Board Options Exchange's Volatility Index (VIX) hit its all-time high last October, and these days it's much, much lower. So that means the market's less volatile right now, right?

No, forget the VIX, he says, because that focuses on options and, thus, the future. He's been counting up the number of days when the Dow rises or falls by at least 1 percent. By his crunching:

Over the last 63 trading days (a calendar quarter, in other words), there have been no fewer than 43 such sessions -- or more than two of every three days in which the stock market was open.

The comparable number as of last Oct. 24, when the VIX hit its all-time high, was essentially the same -- 44 days. So, at least from this perspective, recent volatility is just as high today as it was last October.

And that's very high indeed. Consider that in all of calendar 2005, there were just 27 days in which the Dow rose or fell by 1% -- about once every 10 trading days, on average. In calendar 2006, there were just 25 such days.

The numbers are even "starker," he says, when you look at the days during which the Dow moved up or down by at least 2 percent. By that measure, the market's currently almost as volatile as it was last October and much more volatile than from 2004 to 2006.

Hulbert's conclusion is that options traders "are less concerned about the stock market today than then -- far less." But that worries him because, based on the actual current volatility, he still contends that what's going on now is a bear rally, not the start of a bull run.

The bank that shagged us: Bailout recipient Goldman Sachs now rakes in record sacks of gold

mini-madoff-goldman350.jpg

Normally careful with its words so as not to sound unfriendly to business types, Bloomberg News phrases it just right this morning, saying that Goldman Sachs "took $10 billion from the U.S. Treasury's bank-rescue program in October."

But the public got took worse than that. Now it turns out that Goldman hauled in more than $100 million in trading revenue on a record 34 days during this year's first quarter.

"It was a good quarter," one analyst is quoted as understating.

Yes, but what the story doesn't point out is that, aside from its deep connections to not only the Bush regime but also the Obama regime, this development was just a more subtle, but very effective, bailout of Goldman, which is led by the lookalike duo of Chairman and CEO Lloyd Blankfein and President and COO Gary Cohn.

The story notes out that Goldman's traders were extremely aggressive and took more risks. Well, you would, too, if the FDIC were propping you up by making it easier for you to borrow money to front your stepped-up gambling games.

Yes, the aim has been to get the investment money start flowing again, but does it have to gush like a fucking oil well? Goldman has gone from being supposedly so ailing that it had to be bailed out to now so flush that it's setting revenue records.