The Market Ticker
Commentary on The Capital Markets- Category [Corruption]
2015-09-28 18:00 by Karl Denninger
in Corruption , 610 references

We didn't learn a damn thing from the last time with Lehman, did we?

Allegedly we put "all derivatives" onto exchanges -- or at least we were supposed to.  This, and margin supervision, was supposed to prevent any sort of "credit event" from spreading because with margin supervision you couldn't go underwater; you would be identified and liquidated before it happened.

Oh sure, you might go broke, but that happens every day in the markets and it's not a big deal.  It's the prospect of you failing and taking a bunch of other people with you due to cross-defaults and such that causes the problem.

So now we have this little outfit called "Glencore."  Ok, they're a fair bit more than a "little outfit; they did almost $200 billion in revenue.  But here's the thing -- who cares if their stock goes to zero?

For that matter, who cares if their bonds go to zero?  Yes, they have a lot of debt out, but it's hardly a systemically-important amount of money on a global basis, and this is a global company.

No, the reason people are getting nervous is that nobody knows how much exposure exists to their credit in the derivative markets.

The reason nobody knows is that we still have not forced these trades onto exchanges where margin capacity is known on a daily basis which means that we have not put a stop to writing derivatives with no capital behind them, exactly as AIG did back before it blew up in their face in 2008.

This is an outrage -- and it's even more of an outrage that any financial institution is able to be licensed to do business here in the United States under these conditions.

We deserve what comes if it indeed does because we, the people, stood back and allowed the fraud of early 2009, that of making "mark to fantasyland" to become a formal accounting standard under the FASB due to a committee of Congress mandating same without legislation or public debate.

The market turned around almost to the hour that this scam was put through Congress and it has been on a tear since.  Not one thing changed in that committee room other than legalizing accounting fraud.  If we get reamed by this on a global scale the blame is ours as citizens for not only allowing it to happen but cheering it on.

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If you're an ordinary person your third DUI in today's world winds up being a felony -- and after the first one they prosecute them vigorously, because that third one is a whammy and, in many cases, results in permanent debarment from driving.

Of course if you're a cop it appears you have to kill someone before they get serious about DUI...

NEW YORK –  A New Jersey police officer pleaded not guilty Monday to charges he was drunk behind the wheel in a wrong-way crash that killed two passengers, including a fellow police officer, and critically injured a third.

Pedro Abad surrendered to police and was arrested before he appeared in state court on Staten Island, where the wreck occurred on the West Shore Expressway after the men had left a strip club in March.


Abad, 27, had two drunken-driving arrests in the last four years, including one for an accident in which he plowed through the wall of a convenience store, records show.

So you want people to respect cops when this cop was still a cop after not one but two previous DUI arrests, one of which included driving his car through a building and yet there was no conviction recorded for it?

But we keep hearing that there's no double-standard here and every reason for the people to respect so-called "law enforcement" -- after all, the laws only apply to everyone other than the cops and it's only when people die that prosecutors take notice (and then only sometimes) -- right?

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Gee, where are the handcuffs?

The same analytical technique that uncovered cheating in currency markets and the Libor rates benchmark -- resulting in about $20 billion of fines -- suggests the dealers who control the U.S. Treasury market rigged bond auctions for years, according to a lawsuit.

The analysis was part of a 115-page lawsuit filed in Manhattan federal court on Aug. 26 by Quinn Emmanuel Urquhart & Sullivan LLP and other law firms. The plaintiffs built their case against the 22 primary dealers who serve as the backbone of Treasury trading -- including Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley -- using data from Rosa Abrantes-Metz, an adjunct associate professor at New York University who has provided expert testimony in rigging cases.

Gee, funny that.  Banksters keep doing this sort of thing -- like rigging prices (see the spoofing lately in the markets?), presenting phony, fraudulent, made-up and back-dated documents in foreclosures and now, it appears, re-issued Treasury Auctions (which are very common) appear to be routinely rigged too.

I have one question, and only one, really: Where are the handcuffs and why isn't this a criminal RICO investigation?

Oh, I know the answer -- because nobody on either side of the aisle wants to go there and you won't insist they do, even when it screws you out of billions (and it does, by the way; Treasury rates are at the base of everything when it comes to lending costs, so guess who gets in the backside?  That'd be you.)

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2015-09-20 06:00 by Karl Denninger
in Corruption , 401 references

I have written a number of articles related to various violent rage-monster style attacks over the years in this column; Newtown, Aurora Colorado and others.  These attacks, including others such as the infamous Columbine High School shoot-em-up-fest, have a common pair of thematic elements:

  • The assailants were all late adolescents or young adults.


  • They were all taking, or were just taking, a particular type of anti-depressant called an SSRI.

Correlation is not causation and the plural of anecdote is not data.  However, the lack of such rage-monster incidents among other age groups, when these drugs are prescribed across the spectrum of ages, is extremely curious -- and troubling.

Now we have data, in the form of two studies. The first deals with an infamous Glaxo study known as "329", which was related to the drug Paxil; the US brought criminal charges against GSK and ultimately a $3 billion fine for its marketing of the drug to children and adolescents -- an "off-label" use that cannot be marketed under US law and which GSK claimed was supported by "remarkable efficacy and safety" demonstrated by this particular study.

The problem lies in what was found when the study data was re-analyzed -- specifically:

But according to the RIAT team, the effect of paroxetine was not significantly different from placebo for any prespecified primary or secondary outcome measure.

In other words the drug did not work.

But it gets worse:

In the CSR, serious adverse events (defined as an event that “resulted in hospitalization, was associated with suicidal gestures, or was described by the treating physician as serious”) were reported in 11 patients in the paroxetine group, five in the imipramine group, and two in the placebo group.

In other words the rate of serious adverse events including suicidal gestures was more than five times higher in the group receiving the drug than those receiving placebo -- on a drug that didn't work.

Has this paper been retracted?  No.  Has anyone gone to jail for what certainly appears to be impossible to explain away as "accident" or even "ordinary negligence"?  No.  How many young people are dead as a result and why aren't the people responsible for this under indictment as accessories before the fact on negligent manslaughter charges?

But if you think that is bad then you're really going to like this -- which also bears on SSRIs:

From Swedish national registers we extracted information on 856,493 individuals who were prescribed SSRIs, and subsequent violent crimes during 2006 through 2009. We used stratified Cox regression analyses to compare the rate of violent crime while individuals were prescribed these medications with the rate in the same individuals while not receiving medication. Adjustments were made for other psychotropic medications. Information on all medications was extracted from the Swedish Prescribed Drug Register, with complete national data on all dispensed medications. Information on violent crime convictions was extracted from the Swedish national crime register. Using within-individual models, there was an overall association between SSRIs and violent crime convictions (hazard ratio [HR] = 1.19, 95% CI 1.08–1.32, p < 0.001, absolute risk = 1.0%). With age stratification, there was a significant association between SSRIs and violent crime convictions for individuals aged 15 to 24 y (HR = 1.43, 95% CI 1.19–1.73, p < 0.001, absolute risk = 3.0%). However, there were no significant associations in those aged 25–34 y (HR = 1.20, 95% CI 0.95–1.52, p = 0.125, absolute risk = 1.6%), in those aged 35–44 y (HR = 1.06, 95% CI 0.83–1.35, p = 0.666, absolute risk = 1.2%), or in those aged 45 y or older (HR = 1.07, 95% CI 0.84–1.35, p = 0.594, absolute risk = 0.3%).

Got that?

About 3% of the young people, that is, age 15-24, who were prescribed these drugs had a violent crime conviction that appears to be linked to them taking the drug -- a rate approximately double that of the next age cohort and double that of someone not consuming the drug at all.

There was no statistical increase, however, in older patients.

Considering the seriousness of violent offenses and the fact that this measures only convictions (and we know not everyone who does an evil thing gets caught or is convicted) this is an outrageous increase in risk, particularly when you combine it with the above study that appears to show that at least one of the drugs in this class is not effective in patients in this age group -- that is, it doesn't work.

So we have here a drug that appears, from these studies, to literally provide no benefit but it does create a material number of rage monsters.

Further, that the drug was worthless in terms of efficacy and was also dangerous was known long ago.

Oh, and it makes the companies that produce these drugs and the physicians that prescribe them billions of dollars too.

Exactly why aren't all of the executives associated with this and those who put together and published the original studies under indictment as accessories before the fact for those who have committed suicide -- or homicide -- while on drugs that appear to be worthless for the condition prescribed?

Come talk to me about how wonderful our medical and judicial systems are and why anyone in America should have respect for either of them when everyone involved in this crap has been brought to justice.

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Yes, it's all about health.  Our health.  That's what these "wonder drugs" that the companies come up with sell us.  Oh, and they do sell us on them too -- advertising up the ying-yang, something that in other nations, and ours until not all that long ago, was forbidden, never mind all the lobbying of doctors and others in the medical field that goes on.

Risperdal is a billion-dollar antipsychotic medicine with real benefits — and a few unfortunate side effects.

It can cause strokes among the elderly. And it can cause boys to grow large, pendulous breasts; one boy developed a 46DD bust.

Yet Johnson & Johnson marketed Risperdal aggressively to the elderly and to boys while allegedly manipulating and hiding the data about breast development. J&J got caught, pleaded guilty to a crime and has paid more than $2 billion in penalties and settlements. But that pales next to some $30 billion in sales of Risperdal around the world.

The best part?  The guy at J&J who did this was promoted -- to CEO of the company.

But it's not just about side effects, you see.  It's also about patents, and how J&J tried (and succeeded) in taking a drug that arguably wasn't any better than the long-present generic for the same base condition (schizophrenia) and that's a tiny market.  Oh no, that won't do, so we have to both "expand" the market for the drug to other conditions and lobby hard, both with governments and doctors, to prescribe it.

Then it got even better, the story alleges, in that the company actually went to a nursing home pharmaceutical supply house and cut a profit-sharing deal with them.  You might call that sort of thing "a kickback", because, well, it is.  Oh, and the drug itself wasn't approved for use in the elderly either, yet basically everyone in a nursing home is elderly.

But it didn't end with the old, a few of whom the drug killed.  Oh no, it also extended to children for which the drug was also not approved, and in boys this was quite sad in that about 1 in 20 developed large breasts -- a known side effect of the drug.

I concur with the point that this article makes related to white collar criminals that aren't prosecuted (and in this case the company richly rewarded the person responsible.)  But you see, this isn't limited to drugs -- that just happens to be one of the many cases that have been turned into "pay a fine and go on your way" over the last decades.

The mortgage fraud, securitization scams, the blatant and outrageous market manipulation (LIBOR, spoofing in the electronic futures and stock markets and on and on) and more, much of which has formed the very reason I write The Market Ticker, are well-documented.

There is only one way to dissuade this sort of conduct and that is to start jailing the executives involved in it as aggressively as we go after someone who steals a pack of mini cigars from a convenience store.

And no, this isn't just a matter for the US AG's office -- it extends all the way down to the street cop who looks the other way as those very same executives come and go instead of insisting that the prosecutor's office do their job.

If you work for a corrupt system, profit from it in the form of a paycheck, and refuse to demand that the corruption stop or you are going to resign and blow the whistle then you, by your complicity and personal earnings from same are not only part and parcel of the problem you are an accessory both before and after the fact and the general public damn well ought to treat you that way.

Wake up America; you're not only being robbed it seems you might be poisoned for profit as well.

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