Another brief collection of tidbits we have come across recently.

 

Corzine Lifetime Trading Ban? Say It Ain't So …

The NY Post reports that futures market regulators are considering whether to ban John Corzine from futures trading – forever. That would undoubtedly lower the probability of customer funds vaporization incidents somewhat, but aren't they forgetting something? The man is a valuable campaign funds magnet, and a regular economic guru, quizzed for droplets of his economic wisdom by the highest strata of the administration! The 'go-to' man in fact, according to VP Joe Biden himself.


“The future is murky for former NJ governor and fallen financial titan Jon Corzine.

Two directors of the National Futures Association will move tomorrow to ban Corzine from the multibillion-dollar futures trading industry in light of the scandalous collapse of MF Global — the commodity futures brokerage firm Corzine once headed.

If the motion is approved, NFA would hold hearings to determine whether Corzine, MF’s former CEO, deserves a “lifetime ban” from the industry. Such a ban could hinder his reported plans to launch a hedge fund.

“He [Corzine] doesn’t need to be near anyone’s money ever again in the futures space, and we want to make sure of it,” John Roe, an author of the proposed ban, told The Post.

Roe and James Koutoulas, who helped recover money for MF’s jilted customers, plan to present the proposed ban as their first action as NFA directors. Both were elected in January. MF’s 2011 downfall led to regulatory probes and hearings on Capitol Hill after it was discovered that Corzine’s company improperly tapped $1.6 billion in customers’ funds leading up to its bankruptcy filing. The shortfall also triggered a Justice Department probe — although no charges have been brought.

Roe and Koutoulas’ five-page proposal asks that the board, which meets in Chicago tomorrow afternoon, direct NFA to set up a panel to evaluate whether Corzine violated the agency’s rules by failing to supervise MF employees and through sloppy record-keeping, sources said. The bankruptcy trustee empowered to recover the missing loot has cited “lack of sufficient monitoring and systems” for the shortfall. As the industry’s self-regulatory agency, NFA controls which individuals and firms can deal in futures.”

 

(emphasis added)

Our comment: if there actually are people who want to give Corzine money for his hedge fund, let them! Surely anyone who is not aware of the vaporizer's track record by now is not from this planet.

 


 

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Are they still buddies? If Corzine gets banned from futures trading, the answer is probably no …

(AP file photo)

 


 

Alien_Combine_Soldier

Rumored investor in Corzine's new hedge fund: Zkrrzrrt from Rigel II

(Image via wikia.com)

 


 

We're From the Government, We're Here to Help…

The American Thinker reports that the government is eying retirement funds. And why wouldn't it? The world over governments in dire fiscal straits have already done a great deal more than just 'eying' retirement funds. Pension fund confiscations and misappropriations under the cover of 'helping' future retirees have proliferated in recent years.


Quietly, behind the scenes, the groundwork is being laid for federal government confiscation of tax-deferred retirement accounts such as IRAs. Slowly, the cat is being let out of the bag.

Last January 18th, in a little noticed interview of Richard Cordray, acting head of the Consumer Financial Protection Bureau, Bloomberg reported "[t]he U.S. Consumer Financial Protection Bureau [CFPB] is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency's first foray into consumer investments." That thought generates some skepticism, as aptly expressed by the Richard Terrell cartoon published by American Thinker.

 

(emphasis added)

Usually when the government wants to 'help' you invest your money it means it wants to flog its debt to you. If need be, by force…after all, Professor Ghilarducci said "humans often lack the foresight, discipline, and investing skills required to sustain a savings plan."

Conclusion, they must be helped, whether they like it or not.

 


 

governhelp

Finally,  help is here…

(Image via movingbusiness.net)

 


 

Grounding the Political Class

No more jetting around in Air Force jets for Nancy Pelosi et al.? The world will surely stop turning if these irreplaceable people can no longer get to where they need to go in the plastic-quiet, legroom-enhanced, flying fortresses of contemplation they have gotten used to! The suggestion that they may need to spend time in the presence of the hoi-polloi on so-called 'commercial flights' is just too ghastly to ponder.


“Forget threats of furloughed workers or reduced security at embassies.

Here’s what might be the most powerful incentive yet for members of Congress to come up with a deal to avert the sequester: the head of the Air Force today warned that the spending cuts that will go into effect March 1 could cause the military to eliminate those lovely miljet flights that lawmakers enjoy. Members of Congress adore flying on Air Force jets, particularly for overseas trips — there are no security lines, check-in is a breeze, the service couldn’t be better, and it’s business class-only.

But if the government-wide cuts aren’t thwarted and the military has to pinch pennies, lawmakers might have to kiss those perks goodbye, Air Force Secretary Michael Donley told the crowd at the Air Force Association’s winter conference in Orlando, Fla., we’re told. Fly commercial? The horror.

And if members of Congress are forced into such dire circumstances, they’re in for even more delays. Transportation Secretary Ray La Hood cautioned on Friday that the sequester could cause major backups in airports around the country. So much for all those fact-finding trips.”

 

(emphasis added)

No longer will any facts be unearthed by these worthies! Whatever will now happen with all these facts that are waiting to be found all over the world? Are going to have to go through a dark, fact-free age?

We always thought the 'sequester' was a ridiculous case of way too little much too late, but we may grow fond of it yet.

 


 

alg-speaker-nancy-pelosi-jpg

Pelosi finds out she's been chucked from the air force jet.

(Photo via Ceneta/AP)

 


 

Celebrity Market Pundits Can Cost You a Bundle

If one is actually so benighted to follow the advice of certain celebrity market pundits, or worse, actually give them money to invest, one can end up 'poorer than expected' as it turns out (a bit like European economic data).

Dennis Gartman made the mistake of stepping out of his newsletter (which often sounds as if he were practicing for a part in a Shakespeare play – as a friend recently suggested to us 'probably that of a court jester') into the cold and unforgiving word of the marketplace. There he proceeded to follow his own advice with other people's money. Apparently not to anyone's great profit.


“The best thing you can say about the Horizons Gartman ETF is that it was launched with impeccable timing. The worst thing, which happens to be true, is that it’s a closed-end fund run by a celebrity adviser who has cost investors a lot of money. There are lessons here.

Starting an investment fund in March of 2009 – near the bottom of the market and the start of one of the greatest bull markets of all time – would seem like an easy way to make investors money.

But the Gartman ETF, named after advisor Dennis Gartman, ubiquitous author of the Gartman Letter, an investment advisory, couldn’t harness the benefits of its fortunate timing. The fund went public at $10 a share. Those same shares now fetch around $7.90.

More astonishing is that this closed-end fund actually saw the equivalent of massive redemptions. That’s unheard of in the closed-end world. With the asset base, and therefore fees, down sharply, it’s no surprise that Horizons Alphapro has decided to shut the fund down next month.

Could investors have predicted this spectacular underperformance? To some degree, yes. They also could have asked some hard questions about the investment thesis, which was to follow the advice dispensed in the Gartman Letter.

[…]

Prior to the fund’s launch, Mr. Gartman had no real track record as a money manager. He had published an investing newsletter for years but there was no record of management prowess, no catalogue of returns. There were, however, lots of documented sharp opinions and interesting views and therefore lots of media appearances.

Mr. Gartman’s high profile was a magnet for retail investors, who rushed to buy the new ETF. Even they would have raised eyebrows at some of Mr. Gartman’s trades, though, such as shorting Berkshire Hathaway stock after calling Warren Buffett an idiot – a most unprofitable trade, it turned out.

Another major drawback of a closed-end fund is that it will typically – and swiftly in the case of poor performance – trade at a discount to its net asset value. The NAV is the value of all the investments in the fund. This may add up to $10 a share, but that doesn’t stop the units from trading at $8 a share.

In short, when launched, the Gartman ETF was a bad product run by someone with no record, who ultimately couldn’t overcome the headwinds inherent in a closed-end fund. Investors should have been more wary.”

 

(emphasis added)

Well, calling the oracle names may actually be regarded as excusable to some extent (given said oracle's penchant for statism in spite of having grown rich through capitalism), but that doesn't mean you should necessarily short the stock, especially not when Buffett has the governmental winds at his back in more ways than one. Anyway, the above seems to indicate that Gartman has no good reason to be as arrogant as he usually comes across (of course since we don't know him personally we cannot say if he is not perfectly likable in private – we can only judge his public persona).

Other than that one hopes that a sufficiently large number of people believes his letter actually has entertainment value.

 


 

HAG

Gartman's fund – you've been hagged! – via BigCharts.com – click for better resoluion.

 


 

Senator Corker Gives the Bernank an Earful

Senator Corker wants to take the full employment mandate away from the Fed, which is a splendid idea, although abolishing the whole crypto-communist shebang wold undoubtedly be the best solution (inflationary policy can temporarily increase employment, as long a goods and services prices rise more strongly than wages, short-changing workers if they are prepared to put up with it. It's the Keynesian trick of contending with 'sticky wages' – but the policy in the end creates nothing but unsustainable boom-bust cycles).

In the video linked here, he accuses Bernanke of fostering asset bubbles and phantom wealth (correct), short-changing savers (correct) and playing the currency war game (also correct, since the Fed is inflating faster than other central banks).  Where Corker loses the plot a bit is when he talks about excess reserves, in an attempt to bring up a populist issue (evil Wall Street banks). Anyway, the Bernank is clearly taken aback by his attack and at one point says he has 'the best inflation record of any Fed chairman of the post-war period' – and sure enough, he does! He has inflated money TMS-2 by 76% since early 2008…no-one has inflated more in such a short time!

 


 

corker

Corker in medias res

(CNBC screenshot)

 


 

The Euro Was and Remains Doomed

The Wall Street Journal has a must read article about former eurocrat Bernard Conolly, who predicted the euro area's troubles at a time when the whole mess could still have been averted and was fired for his trouble.

What's so refreshing is that Conolly's analysis of the situation is indeed perfectly  correct. He blames monetary policy and the bubbles it has fostered across the euro area and that is precisely the main reason for the crisis. As we have often pointed out, within euro-land absolutely no-one has as of yet diagnosed the problems that have led to the crisis correctly, and no wonder, they fired the only man who ever did!  Excerpts:


“Seventeen years ago, Bernard Connolly foretold the misery that awaited the European Union. Given that he was an instrumental figure in the EU bureaucracy and publicly expressed his doubts in a book called "The Rotten Heart of Europe," he was promptly fired. Mr. Connolly takes no pleasure now in having seen his prediction come true. And he takes no comfort in the view, prevalent in many quarters, that the EU has passed through the worst of its crisis and is on the cusp of revival. As far as Mr. Connolly is concerned, Europe's heart is still rotting away.

The European political class, he says, believes that the crisis "hit its high point" last summer, "because that was when there was an imminent danger, from their point of view, that their wonderful dream would disappear." But from the perspective "of real live people, and families and firms and economies," he says, the situation "is just getting worse and worse." Last week, the EU reported that the euro-zone economy shrank by 0.9% in the fourth quarter of 2012. For the full year, gross domestic product fell 0.5% in the euro zone.

[…]

Mr. Connolly isn't just any Cassandra. When he predicted disaster, he was running the European Commission's Monetary Affairs Unit, the Brussels bureaucracy charged with ushering the euro into being. His public confession of fear that the monetary union would inevitably produce an economic crisis not only cost him his job, he says, and he was barred from his office even before his dismissal was official. In the introduction to the paperback edition of "The Rotten Heart of Europe," Mr. Connolly describes how his photograph was posted at entrances to the commission's offices, as if he were a wanted criminal.

Mr. Connolly went on to a career as a private economist. His research notes while at American International Group's trading division showed the same flair for bold prognostication. In 2003, as then-Federal Reserve Chairman Alan Greenspan cut interest rates to an unprecedented 1%, Mr. Connolly described the U.S. economy as a debt-driven Ponzi scheme and predicted that interest rates would have to fall even further in the next cycle to keep the scheme going.

[…]

Superficially, there is some basis for the official view that the worst of the crisis is over: Interest-rate spreads, current-account deficits and budget deficits are down. Greece's departure from the single currency no longer seems imminent. Yet unemployment is close to 27% in Spain and Greece. The euro-zone economy shrank ever-faster throughout 2012. And—most important in Mr. Connolly's view—the economic fundamentals in France are getting worse. This week France announced it would miss its deficit-reduction target for the year because of dimming growth prospects.

It's one thing to bail out Greece or Ireland, Mr. Connolly says, but "if the Germans at some point think, 'We're going to have to bail out France, and on an ongoing, perpetual basis,' will they do it? I don't know. But that's the question that has to be answered."

The official view is that the bailouts of Greece, Ireland and Portugal—and maybe soon Spain—are aberrations, and that once those countries get their budgets on track, their economies will follow and the bad patch will be a memory. Mr. Connolly calls this "propaganda."

And here we get to the heart of Mr. Connolly's rotten-heart argument against the single currency: The cause of the crisis, according to the "propaganda," he says, was "fiscal indiscipline in countries like Greece and financial-sector indiscipline in countries like Ireland." As a consequence, "the response is focused on budgetary rules, budgetary bailouts and rules for the financial sector, with the prospect, perhaps, of financial bailouts through the banking union, although that remains unclear."

But even if the Greeks were undisciplined, he says, "both the sovereign-debt crisis and the banking crisis are symptoms, not causes. And the underlying problem has been that there was a massive bubble generated in the world as a whole by monetary policy—but particularly in the euro zone" by European Central Bank policy.”

 

(emphasis added)

Amen Brother! If he hadn't written that book we would be thinking he's reading this blog. It is by the way very rare that a mainstream publication allows such a frank assessment of central bank policy to be printed.  Don't take our word for it, simply do a Google search with the terms 'Bernanke, Corker' as a recent example for this. Every single headline on page one is about 'Bernanke said this, Bernanke said that'. Corker's complaints must be inferred from Bernanke's defense of himself.

Or look at any popular financial publication…even the normally 'neutral' sounding news-wire type media we often use here as a source for current event information, such as Reuters or Bloomberg. There is pro-central banking propaganda everywhere, even if it is sometimes subtly hidden below a surface of 'dry' reportage. Of course there's no need to even mention a den of monetary cranks like the Financial Times…oops, we just did!

Anyway, Connolly knows what's what – he definitely has the number of those bubble-blowers.

 


 

connolly,bernard

Bernard Connolly, searching on the floor for pieces of shattered euro

(Photo via frumforum.com)

 


 

 

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2 Responses to “Tidbits, February 27”

  • Bernanke spent the entire time lying to questions about the effects of his policies. Either that or he is just plain stupid as to history. Then he double talked about the Congress needing to get spending under control, but not now. He has been saying not now for 4 years now. If not now, when?

    I suspect Bernanke needs Federal spending to make it appear his plan is working. What his plan is doing is tying capital up in the money supply. The same strangle that went on in Japan. Next, we will find ourselves eternally debt bound or worse, suddenly collapse. Austerity to socialists is spending more, but less than the more they want to spend. I guess they take advice from John Corziine.

    I am amazed the CFTC had 2 guys get in that would do anything to Corzine. I figured Obama and Biden had the key to that door, but it appears not. If I ran 50 cents of money through the banking system and they wanted to prove where my 50 cents went, they would know in a day or so. But, let the entire collateral of MF Global disappear and they can’t seem to find it. I guess they sent a blind squirrel to find a nut on a frozen tundra? This kind of stuff seems to occur with guys on the inside all the time, especially those with Fed or government connections. Now Obama is going to shut down the prison system, because he can’t seem to find the billions that are leaking out of our government to cover a 2% reduction in budget, better yet 1/3 of the increased spending this year. I guess an Ivy League education doesn’t get you much these days except connections.

  • No6:

    Poor Bernard, speaking truth to power only ever receives a negative response.
    The way the EU is heading, future Bernard’s will be locked up– or worse.

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