Wednesday, October 13, 2010

Glass-Stegall Act repealed and replaced with Gramm-Leach-Bliley Act

I consider myself to be more or less in the political center. I am scared of the possibility of the republicans winning this fall. Only because of the fact that talk of repealing the health care bill is a top priority for the party once they are elected to congress; along with cutting spending, but only in superficial programs, no one talks about cutting defense spending, some $600+ billion plus of the budget. This post really is not about politics but, state of our banking industry. I am mad as hell at Bill Clinton and the 106th congress that supported the, the Financial Services Modernization Act of 1999 aka: Gramm-Leach-Bliley Act, basically the repeal of the Glass-Stegall Act of 1933, which was instituted after the stock market crash of 1929. Which by the way was thought by some the sharpest minds of the time to be necessary deterrent to the natural greed of the financial services industry. after analyzing what had been one of the fundamental causes of the crash, trading on the margin (aka: speculation).

I was shocked at how closely the depression that we are currently in, really does resemble the last one.

Reading Material:

Here is the search results for Glass-Stegall

We have for all intense and purposes, just repeated history.

Only with the social safety nets that were put into place during the last depression. In my humble opinion it is pretty much the same.

What Was The Glass-Steagall Act?

Glass-Steagall Act: The Senators And Economists Who Got It Right
Who's Whining Now? Gramm Slammed By Economists

How bad can this foreclosure mess get? – Pretty Bad

I for one consider myself to fairly informed. This foreclosure crisis is just that a crisis. It really is scary that innocent people can and very possibly getting kicked out of their homes for illegitimate reasons. I know that the people in power have to say the things they are at the moment to try and restore confidence, however this is no minor mix-up in the paperwork. This is serious, and people on all sides have a lot to lose.

This article jumped out at me while surfing some news sites,

The enormous mortgage-bond scandal by Felix Salmon.

Here are other various other reads that really express what is happening and how the people, like Mr. Geithner, don’t see from high above what has actually transpired down below at the individual level. I want to share it with you along with other various view points that really point to the fact that the so called masters of the universe, aka: Bankers, are really in fact incompetent ninnies!

Geithner: Foreclosure Freeze Would Be 'Very Damaging' 

Yes, Mr. Geithner they very well could be damaging, but to restore confidence in the system that seems to have been corrupted and left to run amok. Having a temporary freeze on foreclosure proceedings seems like a fairly sensible option. This is the hangover that the fed and the treasury let happen for not “taking away the punch bowl”. This is a the New Years Day hangover. So do what you have to do to restore confidence, including but not limited to, sending people to jail!!!

Foreclosure Crisis ‘A Legal Impossibility’

Here is a piece from the Securities Industry and Financial Markets Association, that’s says that imposing a system wide moratorium would be “catastrophic” for the economy. Please it would give everyone a chance to sort this whole big warm stinking pile of shit that was thrown against the fan a while ago and see what is really going on. I suspect that the financial services industry is scared that if people actually start to look behind the curtain and really see what the fuck they are selling, that the very possibility is there that we as a society may never let them say, “it’s ok, trust me”.

Thursday, October 07, 2010

Housing Market Conundrum

Talk about systemic risk! Makes you wonder; if home ownership is the "American Dream", and it's wrought with errors, is it by extenstion too big to fail due to "systemic risk" and thus either the $22,500,000,000,000 (22.5 trillion)<that's a lot of zeros!!!> real estate market is going to have to self correct or we are going to bail it out and risk artificially keeping the bubble inflated. Think about it. Just so you know the US economy by assets is worth $188 trillion.
It is such an unwinnable situation, if you bail out the real estate market the average investor loses and the home owner wins, if you don't bail it out, then the average home owner loses and thus the entire neighborhood, and the investor still loses just not as badly.

Again i repeat my question from my earlier post, why is no one going to jail?
 
This just illustrates my point:

Tuesday, October 05, 2010

Pandering To Clients, Firm Distances Itself From Wall Street Whistleblower's Testimony

Wow! This is something that is remarkably absent from the news!! So much for, "All the news that's fit to print". One would actually think that this is a pretty substantial piece of news.

/step onto soap box

Can someone please explain to me why no one is on trial? (click link at bottom) Or better yet jail? This seems like a slam dunk to me. The whole system it's crooked, but the only guy to be sentenced so far is jerome kerviel the french banker that is taking the fall for some powerful people in europe (http://www.huffingtonpost.com/2010/10/05/jerome-kerviel-rouge-fren_n_750464.html). Fall guys will be a while another topic, (I'm thinking UBS whistle blower.) We have some chicken shit people in our country! Two years later and still no one has been charged, tried, our is sitting in jail, I'm sorry how can I forget madoff. I have very little to no confidence in the system after all that has transposed.
Why is no one outraged by this, rather why is the mainstream media completely ignoring this?
Who really cares what sarah palin had to say, she honestly doesn't have any power, she's nothing but a manufactured distraction; same with that ding-bat in Gainsville and his Quarn Bunring nutso idea.
I'd love to see 60 minutes or front line do a piece on this. But, unfortunately people will still bury their heads in the sand. People will have their brains check out and watch dancing with the stars or jersey shore.
maybe this can/should be included in that contract... Um... Pledge to america. So that our wonderful politicians can try and reinstate the glass-stegall act; and not focus on repealing the health care bill. While these yo-yo's on "wall street" continue to do what they have been doing unabated. While our politicians, elected representatives, hope the same wall street that got us to this point will be able to pull the country out of this depression. If history is any kind of a teacher, someones going to have to start a fight that everyone else will get involved in. because it wasn't washington or wall street that pulled the united states out of the depression, but germany, japan, and italy.
Ahem,

/step off of soap box
I'm a little peeved and a little cynical, can you tell?

http://www.huffingtonpost.com/blackberry/p.html?id=750039

Wednesday, May 26, 2010

take this flat earth people, Ash cloud disrupts global aviation


http://english.aljazeera.net//news/europe/2010/04/201041692933434631.html

Friday, May 14, 2010

Holy shit, the gulf oil geyser is a BIG deal

 When I read this article it made my stomach drop. This is one of those things that will leave you dumb founded. As you begin to truly appreciate the gravity of the situation in the gulf. What is the price that we as society are we willing to pay for our "way off life"?


Yeah, this guy plays up some biblical references, however the meat of this really sounds legit. Can anyone rebuke this article?


Source:  http://www.examiner.com/examiner/x-8199-Breakthrough-Energy-Examiner~y2010m5d13-A-volcano-of-oil-erupting

A volcano of oil erupting

May 13, 8:11 AMhttp://image.examiner.com/img/greydot.gifBreakthrough Energy Examinerhttp://image.examiner.com/img/greydot.gifSterling Allan

 The following article was written by my associate, by Paul Noel with some editing and input from me.

New video showing largest hole from pipe 5 feet in diameter spewing oil and natural gas at ~4 barrels per second, along with analysis of the amount of oil on the surface, supports the estimates closer to 1 million barrels per day erupting from this hole BP popped in the ocean floor that contains trillions of barrels of oil and natural gas.

On May 13 from 8-10 pm Pacific, Paul and Sterling will be appearing on True Ott's "The Story Behind the Story" show on the Radio Broadcast Network.

http://www.pureenergysystems.com/news/2010/05/13/9501651_a_volcano_of_oil_erupting/Gule_oil_spill_tankers_development_driller_III_300.jpg
Screenshot from John Wathen's video of the oil devastation.  Here is shown some large vessels trawl around the huge Development-Driller-III which is drilling a side hole to reduce pressure or to plug up the hole dug by Deepwater Horizon.  This is expected to take 2-3 months, considering hurricane season coming.

Mainstream reports are starting to discuss the fact that the oil slick rising from the oil well blowout in the Gulf of Mexico simply has to be a whole lot larger than first reported. 

My first report on this stated that the total could easily be 5,000 barrels per day. I said this when the report was that only 1,000 barrels per day was the stated total. I was being cautious because I knew the total was much higher and I knew the public would not believe the real totals. Most people simply could not imagine a well of the size involved. 

Now I will discuss the real facts that are known and what the educated guesses on the topic indicate. Prepare to get your jaw off of the floor. The facts are stunning.


Pre-Drilling Estimates and Assurances

BP estimated a spill of 165,000 barrels per day would not even reach land! That is what they told the US Government before they drilled the well. They had excellent science on their side, which you can begin to comprehend when you understand how oil reacts in salt water, as we will briefly discuss belowl.

The fact that the spill has reached land clearly states that the size of the spill is probably well above 200,000 barrels per day. Yes, that's BARRELS, not gallons. There are 42 gallons per barrel. 

To get a full estimate we have to look at the process of sinking an oil slick and count money.  A newly released video of the larger of the two leaks also contributes to our understanding of a minimum estimate of the flow erupting from this man-induced volcano of oil.


When An Oil Spill Originates on the Surface

Here is what happens when oil hits the salt water. If it is poured on top of the sea, oil begins to do several things. First some of it dissolves in the salt water. This dissolving is a bit limited but amounts to several percent per day of the spill exposure to the ocean. Some of the oil evaporates. This is several percent per day. This slows over time. As the oil dissolves and evaporates the parts that do this are primarily volatile fractions. These are things like Gasoline and other light components that go away pretty quickly. Once these are gone the remaining oil is heavy fraction crude. This begins to sink into the water very slowly, eventually falling to the ocean bottom over about 6 weeks. Typically this floats into an area where the shoreline is and embeds about 18 inches deep in the sand. This buried oil is not harmless. Just because the beach might appear on the surface to be clear, the sub-surface oil continues its toxic work.  It locates precisely where the little sea creatures live, and it goes on killing them for about 10 years.

The reason a slick would carry farther than predicted is that the salt water is saturated with oil and the air around it is saturated, so the slick cannot dissipate. In the case of the BP Gulf leak, the size of the slick and the location of on shore oil say this slick represents at least 2 times the amount of oil BP estimated would never reach land  -- or 330,000 barrels per day, minimum. This is an educated guess, borne out by aerial photos and the like.


When Oil Shoots Up Through 5000 Feet of Salt Water -- Fractioning Column

In the case of the BP underwater hole, the slick is not being poured on top of the water. It is coming up from the ocean bottom that is 1 mile deep at that point. That fact raises stunning questions on how big the well releases are. 

Rising through 5000 feet of water, the oil is going through a process that the oil men call Fractioning. Literally the tremendous pressure and temperature issue are the equivalent of taking the oil and boiling it in a cracking tower 5000 feet high. The oil and Natural Gas change on their way up. The very light, easy-to-evaporate parts are all that is rising to the surface. 

The heavy oil isn't even getting to the top. That oil is losing its volatile fractions and is being dragged along with the rising column into the surface water where it is probably distributing as tar balls that are not being skimmed up or burned or otherwise disbursed. 

In fact the chemicals added at the well head to disburse the oil, speed this process up. This oil is mixed into the water for the top 250 feet or so. Salinity and temperature issues probably keep this oil from ever reaching the very top of the water. The exact behavior here will not be known until studies are published some years from now.  This is the first time humans have encountered a deep ocean leak of this magnitude.  We're in uncharted territory here.  Volume per volume, it is highly probable that due to this fractioning, this oil blowing into the ocean from a mile down is causing far more ecological trouble than a surface spill of similar size.  

It is also certain that the slick volume on the surface is substantially lower than the rising column of oil.  This is a key point to bear in mind.  Because of this fractioning, what you see from the air on the surface of the water represents maybe just 20% of the volume of the various types of oil in that area. And we're talking an area the size of Maryland (10,000+ square miles) that is on the surface.  The remaining 80% is under the surface; and all of it is highly toxic to the living organisms encountered.

All of this brings into serious question the volumes of oil rising. Every factor suggests massively higher numbers than what has been commonly reported. 


Video of Slick

Here is a video that Alabama resident John Wathen shot as a volunteer pilot flew him over the area where the Deepwater Horizon oil rig sank.  He said, "It's not a leak, it's a volcano spewing oil."


(YouTube; May 10, 2010)

As we watch this, and see other photos and videos from the air and ground/sea level, we can agree with Wathen's comment: "The Gulf appears to be bleeding," which is chilling, considering the prophesy in Revelation 8:8: "The second angel sounded his trumpet, and something like a huge mountain, all ablaze [appearance of the burning rig and slick], was thrown into the sea. A third of the sea turned into blood, a third of the living creatures in the sea died, and a third of the ships were destroyed."  Most ships cannot travel through oil-infested waters without damage, any more than jets can fly through volcanic ash-infested airways.


Budgeting an Oil Rig

There is also another factor that says that the numbers are vastly higher than published to date. That is money. The BP investment in this well is very high -- close to a billion dollars. They must earn over $5,000,000 a day off of the well in order to pay back their investment. (That was before the explosion, and doesn't count the cleanup costs, etc) 

They were, until the well blew, extremely happy with the well. In fact, on the day of the explosions, executives were on board celebrating the well's success.

This well had to produce over 60,000 barrels per day in order to break even. Shocking as it seems, this well would have been closed in and disposed of had it produced a minor total like 20,000 barrels per day. That would have been a "Dry Hole"! It wouldn't have paid for the pipes to bring the oil to market. The fact that BP management was aboard the rig and very happy, celebrating, just prior to the explosion says the well probably produces more than 200,000 barrels per day. It might well have produced 500,000 or more. Royalties to the US Government multiply the numbers for break even by about 2:1 so 500,000 barrels per day is very realistic.  And that is what they would have been celebrating while things were under control.

With this in mind, remember that this well is running wild. A wild well produces far more than a well during normal production. This is why it is so dangerous. The conclusions for how much is coming up are simply unbelievable. 


Natural Gas

The Natural Gas emissions are stunning as well. As you watch the film remember the pipe is 5 feet in diameter.

The Natural Gas doesn't just bubble to the top of the ocean and release into the air. It is absorbed into the water, like air is absorbed, and actually creates oxygen depletion. Hence, the emission of natural gas of these volumes into the sea is producing a significant area of Oxygen depleted water in the Gulf of Mexico which may be very large threat to fisheries and other wildlife in the area. 

Never forget this point. The spill was "Impossible" by the view of the oil men prior to this. The biggest cost of the spill cleanup is being borne by the US Armed Forces such as the National Guard etc. None of these costs will ever be paid by BP. These costs will appear in taxes not in the price of oil. Alternative Oil is vastly cheaper and safer than this. 


Video from Largest Leak

Having just seen (as I write) the film of the larger of the two leaks under sea, I can say with my trained eye that the volume coming out of the hole is in the order of 4 barrels per second (around 350,000 barrels per day).  

As you look at this, it might seem like a small hole, and a small amount of oil.  But bear in mind that the diameter of the pipe is 5 feet -- five feet wide!  Those deep sea drilling rigs don't make small diameter holes like you might be used to seeing on land.  Some of those huge drilling rigs, which make an aircraft carrier look like a toy boat in comparison, put down huge pipe.  The rig that is on site now, Development-Driller-III, which is drilling a relief hole to reduce pressure from the hole dug by Deepwater Horizon, has a torque (drill twisting) rating of 78,450 ft-lbs.  You who know torque will appreciate how huge that is.  Yes, the hole opening is 5 feet in diameter, spewing approximately 4 barrels each second.


Oil and gas stream from the larger of two existing leaks on the riser of the Deepwater Horizon well on May 11. (CNN, via YouTube; May 12, 2010)

What Could Yet Come

This is not a system in stasis.  This is an out of control volcano of oil spewing up with 70,000 psi behind it, from a reservoir nearly the size of the Gulf, with an estimated trillions of barrels of oil and gas tucked away.  What we are seeing now could be small compared to what may yet unfold if things break apart, as they can do under such circumstances.  If this thing blew, it could be like the Yellowstone Caldera, except from below a mile of sea, with a 1/4-mile opening, with up to 150,000 psi of oil and natural gas behind it.

That would be an extinction event.

It is not likely to happen, but it is within the realm of possibilities.

That's the kind of stuff we're playing with here.

When we humans go tinkering around with this stuff, it is like the movie of men flying space ships to asteroids and setting off nuclear bombs to deflect them from hitting earth.  Except in this case, setting off a nuclear bomb on top of a veritable volcano spewing oil from what is presently a relatively small hole in order to shut if off, doesn't seem like a very good idea.


Definitely Far Greater than the 5,000 Barrels / Day First Reported

I have pond in my yard. It holds about 400,000 gallons of water full. I can pump into it with a garden hose over 10,000 gallons of water per day. The hose is 5/8 inch diameter. (35 psi) Summer months I often do this to keep the fish alive. In barrels of oil my pond is just about 1000 barrels. The pond is about 9 feet deep and about 75 feet across. (Tiny pond) I think if you realize that the oil slick in the Gulf of Mexico covers about 9,000 square miles and it it growing you have no trouble at all realizing the real size of the oil supply. I knew this from the very start of the fire etc. 

Spilling the equal of 5 times my pond of oil 5,000 barrels per day would not have even bothered the Gulf of Mexico. It naturally has seeps ( natural leaks of oil) that leak more oil than that per day. The volcano of oil down there is very very much larger than that. 


Postscript

There is no way to get the size of this in mind. It is just too big to imagine. The slick is now as large as Maryland and growing. It will grow probably for 90 days or more. Even if contained tomorrow it will set the record for biggest in history.

Here is a fairly safe estimate of the economic damage to tourism, fisheries and the like in 3 US states. (AL, MS, LA) Over the next 10 years this will cost about $1 Trillion Dollars. BP will not pay this. This does not count damage to ports and trade generally. There is no way out now. What do Texas and Florida get ??? How about the east US Coast or even parts of Mexico? Does this go all the way damaging England and the northern EU?  It certainly will not stop with just 3 states.

Imagine how much alternative energy work that would have produced. Now it is all waste. Now we must do it while it is hard. Imagine how easy it would have been a year or two ago when it was argued it was too expensive. 

We have to turn around from this way and never look back. Freedom, prosperity and happiness will not be found in that eruption of oil in the Gulf of Mexico. 

Some might think that I am against the oil industry. Actually I view them [rig workers, not execs] as some of the bravest most heroic people we have ever seen on earth. I have to say this plainly. I am in awe of many of the things they accomplish. 

I just know that we must get a brighter future. This one has no hope.

# # #

Paul Noel, 52, works as Software Engineer (as Contractor) for the US Army at Redstone Arsenal, Alabama. He has a vast experience base including education across a wide area of technical skills and sciences. He supplies technical expertise in all areas required for new products development associated with the US Army office he works in. He supplies extensive expertise in understanding the Oil and Gas industry as well. 

Born in Lynnwood Washington, he came to Huntsville Alabama, when his father moved to be part of NASA's effort to put men on the moon. Neal Armstrong may have gotten the ride, but his father's computers did the driving. 

Paul is also a founding member of the New Energy Congress.

Previous Coverage

http://www.pureenergysystems.com/news/2010/05/01/9501642_Deepwater_Horizon_debacle/Deepwater_Horizon_burning_95x95.jpg

  • Oil > Ecological Impact >
    Deepwater Horizon debacle pushes alt energy - In addition to devastating ecological despoiling, the oil slick could shut down Mississippi River transport, effecting nearly half of U.S. import/export commerce. The damage to the tourism industry in Alabama and Florida could top $25 Billion a year for several years. Faced with this disaster the Obama Administration has just stopped all off shore drilling. (PESN; May 1, 2010)

 

http://www.pureenergysystems.com/news/2010/05/06/9501646_Mother_Gusher_danger_not_past/BP_deepwater_horizon_solution_explanation_95x95.jpg

  • Oil > Ecological Impact >
    Mother gusher danger not passed - With BP applying several fixes to the leaking well and the spreading oil, people might tend to classify this spill as "just another spill" among so many, which will go away after a while. A blowout is still a very real possibility, and the repercussions of the oil spilt are far-reaching. (PESN; May 6, 2010)

Additional Links

 


Friday, May 07, 2010

ROV Vid: See the oil gushing into the water off the coast of Louisiana.

This is absolutely incredible… look in the background and you will see it. I think it's more than "5,000" gallons/day. How is this number even estimated, does anyone know?(Not rhetorical)

http://www.huffingtonpost.com/kevin-grandia/first-underwater-footage_b_567007.html

 

Thursday, May 06, 2010

Why Jamie Dimon will not debate Elizabeth Warren CFPA

/Step onto Soap Box

Elizabeth Warren who is championing (and should run) for the CFPA (Consumer Financial Protection Agency) should not be ignored by anyone that cares what happens to our economy in the long run. She has been promoting consumer protection what is now way back in 2004. Here on a PBS Frontline piece about, “The Secret History of Credit Cards” which aired on 11-23-2004. Which I highly recommended that everyone watch because you will understand why the banks are the way they are. Here she is again in Harvard Magazine, bring to light the harsh and deniable truth about, “The Middle Class on the Precipice.” I only bring this up because I came across this article on the Time, “Why Jamie Dimon is Afraid of Elizabeth Warren.” Why do you ask is the CEO of the 7th largest bank in the world afraid of this woman, with her background as professor of at Harvard in contractual law. Because he (and most all the big boys up in the top 1% of earners) know that she is right. I truly believe that there is a war on the middle class. This financial crsis is, in my humble opinion the nasty side of capitalism. I do not believe in the idea of Trickledown Economics from the Reagan years. In theory it is a sound idea, however over the last 30 or so years it has not panned out the way that it was sold, as evidenced here. Those on wall street are not the kings of the universe as they continue make themselves out to be. As Michael Moore said during an interviewed on the Hannitys', excerpt:

MOORE: Yes, yes, and there's a lot of small business people who struggle to get by. You know, I'm not against — when you say I'm against capitalism, I'm against what it has become.

HANNITY: In some instances.

MOORE: In most instances. Downtown here in the big picture of how this economy is being run, of how the money is being moved around. We don't make things anymore, Sean. Have you recognized that?

HANNITY: I've made things my whole life, so I agree with you. I agree with you.

MOORE: I'm talking about the money. We just make money off money now.

HANNITY: Some people do and some people do it in ethical way. Some people do it...

MOORE: But where's the stuff? Where's the next invention? Where's the thing — where's the incentive for our young people?

HANNITY: They're the ones that provide these start-up companies sometimes, the money that gets, you know, the next new drug that's going to extend or prolong our life. They're the ones that create the goods and services that we desire every day



We have less and less wealth in this country, we continue to ship it overseas in the way of jobs. We cannot have a strong middle class without a solid manufacturing base, which just emphasizes Mr. Moores’ point about. Only the self proclaimed kings of the universe seem to be making anything and it seems that their workmanship is pretty fucking shoddy. What check and balance is in place to examine the product, (that, remind you is able to be patented, copyrighted, and stolen), they are creating is safe. As you can see just by this site Foreclousures.com. Whenever 3M makes something for a home the FTC has to approve it through a process. Whenever BP drills a new oil well the EPA and Dept. of the Interior has to approve it through a process. Whenever something gets introduced into the food supply the FDA and USDA have to approve it through a process. So who checks to see if a mathematical formula, or the wording on a contract is going to bring a country to its knees before it happens? Or to check if it’s even fair.

Just for the record, I'm not against capitalism, I'm just not happy with the way it has evolved. I think it has lost its way.

This is a great op-ed by Elizabeth Warren on the middle class.

Updated: 5/9/2010 13:15

/Step off of Soap Box

Tuesday, April 27, 2010

Andre Bauer, South Carolina Lt. Gov., Blames 'Flat-Out Lazy' People For Immigration Problems

If you receive public assurance in S carolina then you must be lazy. While I agree with the generalization, it is an incredibly callous comment. And surely taken out of context. (I haven't read the original comment)
http://www.huffingtonpost.com/blackberry/p.html?id=551985

Saturday, April 24, 2010

The SEC Lawsuit = Change? GOD, I hope so

Bond Market Will Never Be the Same After Goldman: Michael Lewis

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Commentary by Michael Lewis

April 22 (Bloomberg) -- If you happen to be sitting on the Goldman Sachs bond-trading floor life must feel horribly unfair.

You did nothing worse than live by the ethical assumptions of your market -- any money-making event short of obviously illegal is admirable -- and now your own grandfather thinks you’re some kind of monster. Your world feels upside down: What was right is now wrong; what was good is now bad; what once felt like winning now feels like losing.

You are probably wondering: What next? What will the angry rabble -- all those ordinary people who can never really understand your business -- now demand that you explain to them, so they can disapprove of you all over again?

A few possibilities:

No. 1 -- Full knowledge of the inner workings of your proprietary trading desk.

In particular: the moment-to-moment dealings of your correlations traders from late 2004 (when they first exploited American International Group’s idiotic willingness to sell cheap insurance on pools of subprime mortgage loans) until the end of 2007, when they would have taken most of their profits from the total collapse of the subprime bond markets.

Your bosses claim to have lost almost $100 million on the Abacus trade for which your firm is being sued. This seems, to put it mildly, disingenuous. In March 2007, the time of this particular Abacus trade, your prop traders were already short the subprime market. Would they really have taken a naked long position in a deal you helped to construct precisely so that it would fail without offsetting in some other way on their books?

Ritual Sacrifice

Sadly, it will not suffice to offer up Fabrice Tourre as a ritual sacrifice. No one is going to accept a then 27-year-old Frenchman, whose job was apparently to keep sweet the patsies on the other end of your trades, as the world’s authority on your trading positions.

His name isn’t even on the top of the list of Goldman traders listed on the $2 billion Abacus deal for which you are being sued. The name on top of that document is Jonathan Egol. Egol appears to have been the bond trader at the center of your Abacus program. The same Jonathan Egol who told fellow traders in 2006 -- a year before this transaction -- that the subprime market was doomed.

The public eventually will ask: Who is Jonathan Egol and what exactly was his game?

No. 2 -- A far better understanding of your relations with the inaptly named “CDO manager.”

Clearly Clueless

In this case the manager was ACA Management, but there were other CDO managers at least as pliable as ACA. The SEC suit charges you with using ACA as a shill: the end investors in your CDO assumed that it was ACA’s job to figure out whether the bonds inside the CDO were intelligent investments.

But ACA quite clearly had no idea what it was doing -- and you quite clearly understood that.

The telling details here are the e-mails between your French salesman and ACA, in which ACA feels it needs to understand exactly what John Paulson’s interest are in this new CDO. Paulson, who had done a great deal of analysis on the underlying bonds, was of course picking the ones he wanted to see inside the CDO. (Hard to understand why it didn’t disturb you that he was even in the room, by the way, but that’s another conversation.)

The SEC accuses you of lying to ACA, by suggesting Paulson was a long investor in the deal when he was in fact selling the deal short.

Good From Bad

But what’s interesting here is what you appear to take for granted: that ACA has no talent for evaluating the bonds picked by Paulson. After all, if ACA was doing its job it wouldn’t have cared one way or the other what Paulson (then a little-known hedge fund manager) was up to. ACA would have known which bonds were good and which were bad, and picked the good ones.

In their anxiety about Paulson’s motives we can all glimpse their incompetence. They want to know that Paulson has an interest in picking the good ones because they themselves have no clue which ones they are.

But if a CDO manager had no independent ability to select the bonds inside a CDO what, please explain to us, was his financial function? Why did you select ACA to manage your deal?

No. 3 -- A far better sense of why, and when, you ceased completely to concern yourself with the consequences of your actions.

The masses will be curious to know, for instance, how you became blinded to the very simple difference between right and wrong. The more moralistic among them will ask the question mainly to fuel their own outrage; the more tactical will ask the question because they sense that the financial system doesn’t function unless you have the incentive to think in these terms - - and you clearly do not.

Soul-Changing

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.

(Michael Lewis, most recently author of the best-selling “The Big Short,” is a columnist for Bloomberg News. The opinions he expresses are his own.)

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To contact the writer of this column: Michael Lewis at mlewis1@bloomberg.net

Last Updated: April 21, 2010 21:00 EDT

Tuesday, April 13, 2010

Goldman Sachs Evil? or Incredibly Clever?

Goldman Sachs Hatred Might Cost You Your Bonus: Jonathan Weil
http://www.bloomberg.com/apps/news?pid=20601039&sid=an4AafR_zcJI

Senate Probes Banks for Meltdown Fraud

 
Goldman Sachs News Page
 

4-Way Fermi GTX 480 SLI

holy shit! Runs on 1.2 kilo watts!
also doubles as a space heater and stove, just add a hot plate. Btw, for those that don't know, this chip,  fermi, runs at a nice 105°c. That's not overclocked, but designed that way. Maybe just maybe things have gotten a little out of hand in the graphics market. anyhoo, enjoy the pics.

http://www.tomshardware.com/news/fermi-gf100-gtx-480-sli-gtx-470,10158.html#xtor=RSS-181