WHEN I last wrote about Goldman Sachs in late March the most politically-connected and luckiest firm on Wall Street was in the middle of rigging the stock market -- again.
"Something smells fishy in the market. And the aroma seems to be coming from Goldman Sachs," is the way I put it in that March 28 column.
Well, a lot has changed in just the past few weeks. And I'd like to put it all together for you, and for the rest of the media should it choose to follow what is shaping up to be the most incredible financial story ever. Back in March I noted that the rally occurring in the stock market had the indisputable fingerprints of Goldman all over it. There were numbers to back it up. Despite the fact that regular investors seemed to be pulling their money out of the market or -- at best -- investing conservatively, stock prices were zooming. The reason was simple: Big investors were pouring money into equities.And Goldman Sachs was the biggest of the big.
According to the New York Stock Exchange figures for the week of April 13 that I quoted, Goldman executed twice as many big trades -- called "program" trades by the industry -- as any other firm. And, the bulk of the 1.234 billion shares bought by Goldman that week were paid for with the firm's own money.
Of course, Goldman would have to be mighty confident that stock prices were going up to risk so much of its own capital. Or, perhaps, it knew stocks would be rising.
This was the time, remember, when banks were trying to recapitalize by selling shares to the public. Goldman, you'll also recall, had turned itself into a bank holding company so it could take $10 billion in government money under the Troubled Asset Relief Program. Goldman also sold billions worth of new stock to the public while all this was happening.How much harder would it have been for banks to sell stock to nervous investors if the market was swooning rather than booming? Goldman's sudden and inexplicable optimism about stocks was incredibly opportune for the banking industry in general, for Goldman in particular and -- here's where the conspiracy starts to unfold -- for the government. It's tough, however, to do what needs to be done to rescue the market when pesky journalists and annoying bloggers are looking over your shoulder.
U.S. Rep. Alan Grayson, known on Capitol Hill for aggressively questioning key players in the nation’s financial crisis, has suffered a “financial disaster” of his own, he confirmed to FLORIDA TODAY news partner WKMG Local 6. Grayson, D-Orlando, fell victim to a billion-dollar Ponzi scheme operated by Derivium Capital, a South Carolina firm that a federal jury ruled in February defrauded Grayson of $34 million -- an amount equal to more than half of Grayson’s 2008 net worth. “It was very much like the Bernie Madoff situation,” said Grayson, who’s had Madoff’s Ponzi scheme in his crosshairs from his seat on the House Financial Services Committee. In February, Grayson’s Washington office issued a press release criticizing Madoff’s “penthouse arrest,” calling for the swindler to be jailed while awaiting sentencing. And in video played thousands of times on YouTube, Grayson on Feb. 4 facetiously asked a financial expert who tried in vain to warn regulators about Madoff’s scheme: “You referred to this several times as a Ponzi scheme. Is that some newfangled thing?”
Sergey Aleynikov, the former Goldman Sachs Group Inc. computer programmer arrested last week for stealing software, told an FBI agent he uploaded proprietary code to an encrypted server he had used on “multiple occasions.” Aleynikov, 39, told the agent around 1 a.m. on July 4 that he had logged into Goldman’s computers through remote access from his home and sent encrypted files to a repository server with the URL identifier svn.xp-dev.com, according to a copy of his FBI statement in court files in Manhattan federal court. Xp-dev.com is registered to London resident Roopinder Singh, who describes himself on a blog linked to the site as a trading systems developer working in London’s financial services industry. The site offers “subversion hosting,” letting users track current and previous versions of programming code and other documents. Singh told his customers in the blog yesterday that he’d been contacted by “local UK authorities,” who had seized his hard drives to examine them and shut his service down for 45 hours, beginning on July 6, two days after Aleynikov’s arrest.
The economic problems of American families are now pounding many state governments which are in turn slashing services to balance their budgets in one of the most difficult years in decades. High on the chopping block are benefits to the poor, money for education, highway repairs, hours that state offices are open and even closures of state parks and recreation areas. Things are so bad that 48 states addressed or are facing shortfalls in the fiscal year that just started. The total deficit: $166 billion, according to the Center on Budget and Policy Priorities. Many states are also already predicting shortfalls next year. Only Montana and North Dakota have so far been unscathed in their state budgets. The problem: as workers get laid off or see their pay cut, they end up owing the state less in income tax. Further compounding the issue is a shortfall in sales tax caused by consumers cutting back in the recession. Finally, companies are making less money and also paying less in taxes. "It's a revenue problem, not a spending problem," said Elizabeth McNichol, a senior fellow at the center. Unlike the federal government, nearly every state is legally required to balance its budget. For many, the spending cuts would have been worse without the $787 billion federal economic stimulus package. No one is immune from the wide-ranging cuts. "States are really looking at everything," said Todd Haggerty, a research analyst with the National Conference of State Legislatures. "Anything and everything is on the table." To come up with a list of the worst state budget situations, ABC News asked the Center on Budget and Policy Priorities to look at the budget gaps that states closed -- or still need to close -- as a percentage of their overall budgets. Coming in at the top of the busted list is California, which is going through a miserable budget crisis. But there are also some surprises on the list, including Alaska and Vermont.
Gresham College
Barnard’s Inn Hall
Professor Avinash Persaud
July 10, 2004
Throughout financial history, there has been a tendency for one currency standard to dominate the world.
* What will bring about the end of the dollar's current hegemony in finance?
* What will the consequences be for the US and the rest of the world?
* Which new financial empire will rise from the dollar's ashes?
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The final tally of claims from victims of Bernard L. Madoff’s vast Ponzi scheme comes to more than 15,400, substantially higher than the 8,800 claims that had been filed by the first of June. The total was included in an interim report filed on Thursday in Federal Bankruptcy Court in Manhattan by Irving H. Picard, the trustee overseeing the liquidation of Mr. Madoff’s estate. The report, which covers the first six months of the trustee’s tenure, also provided some limited details about his independent examination of the Madoff fraud, which continues to be investigated by federal prosecutors and securities regulators. More than 230 subpoenas and 90 additional letters seeking information have been issued in the trustee’s investigation, which he said had “unearthed a labyrinth of international funds, institutions and entities of almost unparalleled complexity.”
Discussion of the 50% Retracement Rule,
potential future price levels, time studies, key dates, Fibonacci, Gann, Astro numbers, Robert Rhea's Great Depression analysis.
The June issue of Gregor.us Monthly, The Scholarship of Collapse, addresses several views of economic and systemic collapse from the works of Jared Diamond to Joseph Tainter, and then goes on to apply these views to the United States–and to its biggest state, California. Frankly, it’s not much fun to suggest that another leg down in housing is on the way. Or, that California is unlikely to see its GDP exceed its previous peak for quite some time. But without the two industries that characterized post-war growth in the US, housing and automobiles (and the financial industry that squatted on top of these) it’s hard to see how California–and the US by extension–does not become a permanently smaller economy. Ouch. Permanently smaller economy!? Are you kidding me? The United States? Yeah, I know. The growth paradigm since WW2 is so firmly entrenched in the record (and in the psyche) that mere mention of US economic stasis seems outlandish. To suggest, as I am, that this condition will carry on for years sounds impossible. However, that is my call. I now foresee zero, net physical infrastructure or housing growth in California for at least another 5 years. If housing units go up somewhere in California, they’ll be bulldozed someplace else. If new roads or highways are erected, they’ll be discontinued or dismantled somewhere else. Without California, there will be no sustainable US GDP growth.
Last week, we discovered that the state of California will gladly pay you Tuesday for a hamburger today. With California mired in a budget crisis, largely the result of a political impasse that makes spending cuts and tax increases impossible, Controller John Chiang said the state planned to issue $3.3 billion in IOU’s in July alone. Instead of cash, those who do business with California will get slips of paper. The California morass has Democrats in Washington trembling. The reason is simple. If Obama’s health-care plan passes, then we may well end up paying for it with federal slips of paper worth less than California’s. Obama has bet everything on passing health care this year. The publicity surrounding the California debt fiasco almost assures his resounding defeat.
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