So Lehman's Fuld says he's "confident" in the firm's outlook:
"Lehman rose in New York trading after Fuld, in his first public appearance since April, said the company had fairly gauged the market value of the assets, as his finance chief laid out more details on the stakes than previously disclosed. Lehman, the fourth-largest U.S. securities firm, today reaffirmed that it lost $2.8 billion in the quarter. "
Yeah, right. We should believe this because? Did you tell the truth the last two times? Three?
More importantly, however, is "how do you make money going forward Mr. Fuld?" Proprietary trading? Not exactly a core business, right? Lending? To whom and based on what collateral? SIVing and Slice-n-Dice? Is that part of the market ever going to return? I wouldn't take that bet. Advising on LBO deals? How many of those will there be?
Oh, and as to that "takedown" of your leverage ratio. How, exactly, was that accomplished? There are rumors floating around (hattip "Naked Capitalism") that Lehman may have self-financed yet more SIV-style games, effectively shifting "assets" over to subsidiaries that they ultimately are supporting and controller, while owning as much of it as they possibly can without triggering "consolidation" rules. True? No idea, but absolutely nothing surprises me any more.
This is the problem with "earnings releases" as things stand today, you see - the 10Q is not available when the "earnings" are released, so analysts (and investors) can't try to suss this sort of thing out. And, surprise-surprise, no questions on this sort of thing were asked in the conference call.
Hmmm.
Oh, the Mortgage-gate story is getting more legs:
"Congress also needs a full accounting of the contacts between Countrywide and the politicians receiving favors from the lender. Did Countrywide ask for and receive assistance from the Friends of Angelo? With Senate Banking Chairman Dodd at the center of the scandal, ranking member Richard Shelby (R., Ala.) and House Financial Services Chairman Barney Frank (D., Mass.) will have to lead the inquiry.
But taxpayers should not have to wait for the results of an investigation. Democrats in Congress are trying to pass a bailout for mortgage borrowers and lenders like Countrywide, and they have been holding reform of Fannie Mae and its cousin Freddie Mac hostage to get President Bush to agree. Mr. Dodd is one of the main hostage-takers. It is time he and Mr. Frank dropped this political ransom-taking and finally subjected Fannie and Freddie to tough oversight. This means giving a regulator the power to set their capital ratios and portfolio securities limits, so that taxpayers have some protection against their potential losses."
No kidding? Seeing this from The Journal warms the cockles of my heart.
In other words its about damn time.
The insanity of these Congresscritters claiming "they didn't know" isn't amusing. And since when is getting a loan that isn't offered at any rate (as is alleged to have taken place in one case) "not a special favor"?
Speculation is now running rampant about whether Ben's Fed means what it says, or is full of liars. See, they've made all sorts of noise about removing liquidity - raising rates - to control price inflation.
Well, an article in the WSJ says nuts:
"There is so far little evidence that either underlying inflation or the public's long-term inflation expectations have reached a danger point. Mr. Bernanke and most other officials believe inflation expectations remain under control. The pace of inflation, excluding volatile energy and food prices, has remained near the top of the Fed's preferred range of 1.5% to 2%, based on its preferred price index. "
Ha! 2% my ass. First, we all buy that pesky food and energy. I know I do and you do too. Of course in the Ivory Tower World of Bernanke, these things don't matter.
In truth Ben doesn't seem to give a damn if your purchasing power is shredded. But he should, because it is purchasing power - discretionary spending - that powers our economy and ultimately GDP. Cripple that and you get a nasty recession - or worse.
Arthur Burns, er, Bernanke, simply doesn't give a damn about you.
Let's look at the history here - Bernanke sat back and allowed the housing bubble to take place, he allowed $500,000 mortgages to be written by banks he has regulatory authority over to McDonalds' workers making $35,000 a year, and he is currently sitting with nearly $300 billion in slosh - about $250 billion more than normal - tamping down interest rates so the banks can be "recapitalized" on the back of your gasoline bill which is now, in most parts of the nation, north of $4/gallon!
Don't let these clowns get away with the claim that "there was nothing they could do" to prevent the housing bubble from taking off and ramping into your face.
That's a bald-faced lie.
Both Congress and The Fed had every ability to stop the securitization of loans that were demonstrably unsound.
We now know about "Friends of Angelo", and that explains much of the Congressional blindness towards the lenders who systematically wrote paper that under any reasonable set of standards was objectively unsound.
They didn't care and they still don't.
They talk tough but they also trade on inside information, because for them, its not illegal. They can (and do) leak information to lawmakers and the media, and that media is now saying that Bernanke has no intention of draining the swamp.
To be blunt Bernanke and Congress both think you are too stupid to wake up and stop them through political pressure and/or direct action. They're quite sure you won't mount organized protests and shut down industry. They're quite sure you won't vote them all out of office. They're quite sure you won't all go to the bank and withdraw your money, banking in "The Bank of Sealey" and refusing to use credit, as an act of protest.
In short, they're quite sure you are a sheep and that they can shear you repeatedly, time after time, and the history of the last thirty years suggests that they're right - you will whine and complain but you will not only go to work (instead of going out on a "general strike") but you will also continue to spend more than you make until your credit cards are all literally declined!
Oh, and before you say "oh those poor bastions of Capitalism" Goldman beat handily today, posting over $4/share in profit in the current quarter. So much for them "needing" Bernanke's "recapitalization" eh?
The truth is that you, Dear Reader, are being systemaitically screwed by both Burns-cum-Bernanke and Congress, and until you do something about it the screwing will continue.
Dickey Durbin was on CNBC this morning crooning about "eeeeviiilllleee speculators" in the energy markets. Bah.
The reason you're paying $4/gallon for gasoline is because Congress and The Fed looked the other way while the housing bubble was being blown, utterly refusing to do their job of regulation, and now they are both allowing Bernanke and Pals to artifically tamp down interest rates so you can be screwed AGAIN while Goldman makes $4.50/share this quarter and buys back more than a million shares of its own stock!
YOU are paying for this in the form of seventeen percent annualized producer price increases and $4/gallon gasoline.
Until you are willing to organize your friends and neighbors and literally shut down cities - drive at 5mph through the streets of major cities on the freeway and stop commerce, refuse to show up for work, refuse to borrow and spend more than you make, show up in Washington DC with a million of your neighbors and literally shut down The Capitol you WILL be bent over the table on a daily basis.
YOU have demonstrated time and time again that your only response to this is to say "go ahead and******me again if you must, but please don't cut off my credit cards!"
Examples? Which ones would you like me to list? Huge numbers of people are against the Iraq war, right? You were promised the Democrats would cut off the funds as soon as they were put in office. Did they?
No.
What did you do? A half-dozen people showed up at a congressional hearing and interfered, being carted out by Washington DC police.
That's it.
Half the nation wanted their elected representatives to cut off the money, were told they would, were lied to and then those very same people who said this was the most important issue in the last election couldn't be bothered to show up in DC and clog up the city to the point that it couldn't function.
ONE HUNDRED MILLION PEOPLE claim they were*****ed, but A DOZEN showed up in a congressional hearing and were arrested.
One dozen.
If just one percent of that claimed 100 million - 1 million people - had showed up in DC and simply sat down in the middle of the roads, making it impossible for commerce or government to function, the funds would have been cut off immediately and what you claim you wanted - an immediate end to the Iraq war - would have happened.
And now you wonder why Bernanke and Congress take their "special loans" and throw $300 billion in slosh into the system, generating $4/gallon gas prices?
You have repeatedly demonstrated that you will say "thank you" when you get screwed by these people!
Goldman Sachs just reported over $4/share in a profit which they earned in no small part from their commodity trading activities.
In other words, as a direct consequence of what you have allowed them, through Congress and Bernanke, to do to you.
That money came straight out of your pocket and you said "thank you."
On the prosecutorial trail it appears that we might be about to get some action there:
"Federal prosecutors and the U.S. Securities and Exchange Commission may bring criminal and civil charges in a probe of Bear Stearns Cos. hedge funds whose collapse ignited the subprime mortgage crisis last year, people familiar with the investigations said.
....
Indictments against Cioffi and Tannin may be just the start of a U.S. probe of the credit crisis, Frenkel said.
``We're likely to see cases from the top all the way down to the mortgage brokers,'' he said. "
Hope springs eternal.
PPI up 7.2 headline year/over/year, up 1.4% on the month.
Up 1.4% on PPI headline annualizes to nearly seventeen percent.
Core up 0.2%? Ooook.
Housing starts down 3.3%. Oh, and do you remember that "multifamily" surge that caused the cheering last month? This month, down 8%. Yeah.
And the futures? All they care about is that Goldman (and the rest of the bankers) have succeeded in robbing you through a producer price inflation index that is up seventeen percent on an annualized basis last month, and you, so far, are bending over the table and saying "you have permission to rape me again but please leave my credit cards alone!"
"America, the land of the free and the home of the brave" has turned into "America, the land of the fool."
SEVENTEEN PERCENT PRICE INFLATION IF YOU ANNUALIZE LAST MONTHS NUMBER.
Do you remember the 1970s?
They're back.
Now, given the facts, are you going to be a good sheep and bend over the table for your daily dose of financial rape, or are you going to get off your ass and stop it?
