Wall Street Banks Are Doing Less and Less Good For Society, Says John Cassidy

http://finance.yahoo.com/tech-ticker/wall-street-banks-are-doing-less-and-less-good-for-society-says-john-cassidy-535678.html?tickers=%5EDJI,%5EGSPC,GS,XLF,ms,skf,skf&sec=topStories&pos=9&asset=&ccode=



According to John Cassidy, Wall Street banks are supposed to act “like a power utility… except they provide money rather than power.”

But what happens when the power utility, instead of focusing on how best to manage and distribute power, decides to focus on using customer funds to make a quick buck?

The answer, as Cassidy explains in his recent New Yorker article, is a financial system pushed to the brink of collapse.

As he explains to Aaron, Wall Street - at its best – serves an important and necessary purpose: to raise capital for businesses, which in turn fuels the economy, creates jobs and improves the overall standard of living. Lloyd Blankfein famously called it "God's Work." The problem is, investment banking isn't the focus anymore.

Instead, the banks engage in a socially worthless pursuit of profits, via trading, creating huge amounts of risk for everyone – except the actual players of the game.

As Cassidy writes in the New Yorker, the banks have “turned themselves from businesses whose profits rose and fell with the capital-raising needs of their clients into immense trading houses whose fortunes depend on their ability to exploit day-to-day movements in the markets.”

And the problem is that, even after

Insider's Take on the Insider Trading Scandal

http://www.minyanville.com/businessmarkets/articles/insider-trading-todd-harrison-wall-street/11/23/2010/id/31300

I hear what Todd is saying, BUT and it's a big but to.
The world's taxpayers is continuously having to sign on the dotted line for the repayment responsibility for all the woes of Wall Street.
Do you know how you rid of termites?
You tent the house and fumigate it.
So we either shut the markets down and clean house properly in every nook and cranny or we deal with the riot.
I realise your profession of trade would be on hold, for as long as it takes to flush the fraud, but hey as far as an outsider can see regarding the picture that's come to light, there are no corners and no boundaries of borders, for the entire financial system.
As your so fond of saying, as well as a spiritual lesson of my own, learned long ago,
One must look at both sides of the coin.
Perspective is an interesting thing, as well the many degrees there are of it.
Have you yourself taken sustenance from the taxpayer's table, as an uninvited guest?


The easiest thing in the world to do is say "Wall Street
is evil" and throw every hedge fund under the bus.

I’ve read a lot of news reports overnight and virtually every one of them adopted the same populist cry. I even saw Inspector Kemp interviewed on this topic, where he said, and I quote, “A riot is an ungly thing... undt, I tink, that it is chust about time ve had vun!”

Earth to Matilda -- not all hedge funds are evil. The majority of the industry is comprised of good people making honest livings, or at least they were considered honest when free market capitalism had a positive connotation.

Don’t get me wrong; if someone crossed a legal line, throw the book at them and demand restitution but let's not try the industry in the court of public opinion and assume they’re all criminals. That's misplaced anger and endemic of a broader shift in social mood

Watch Inside Job - The Movie

http://www.zerohedge.com/article/watch-inside-job-movie

You gotta watch it kids, to understand what they don't want you to know.


We take a few minutes from our readers' busy time, to recommend they watch the movie Inside Job, which is probably one of the best documentaries on the market crash (this is a completely unsolicited and unpaid recommendation). If nothing else (and there is much else) the key redeeming feature of the movie is the complete obliteration of any credibility that former Fed director Fred Mishkin (and rumored Larry Summers replacement) and current Columbia business school dean Glenn Hubbard may have had.

Below is the official trailer:

The Fed is fuelling the catastrophe of fast rising raw material prices

http://www.telegraph.co.uk/finance/comment/jeremy-warner/8090590/The-Fed-is-fuelling-the-catastrophe-of-fast-rising-raw-material-prices.html


It's called inflation and the Federal Reserve and Central banks (help) are the reason it's rising.
Their economic fix is making your meager life unaffordable.


The answer to this question, according to a recent OECD and UN Food and Agriculture Organisation report is a definitive no; global agricultural production is on track to satisfy the expected long-term increase in demand, the OECD reckons.

Yet it's little thanks to public policy, which in combination with the current craze among financial speculators for commodities, seems hell bent on driving up prices to what for millions of the world's poor may be starvation levels.

SIGTARP Calls Out Tim Geithner On Various Violations Including Data Manipulation, Lack Of Transparency, "Cruel" Cynicism, And Gross Incompetence

http://www.zerohedge.com/article/sigtarp-calls-out-tim-geithner-various-violations-including-data-manipulation-cruel-cynicism

Little Timmy got his report card
Lets just say it wasn't up to par
And his conduct grade was even worse

SigTarp Neil Barofsky has just released the most scathing critique of all the idiots in the administration, with a particular soft spot for Tim Geithner.

On the failure of TARP to increase lending:

Foreclosuregate fallout: How bad can it get for Wall Street?

http://www.huffingtonpost.com/zach-carter/foreclosuregate-fallout-h_b_770359.html

Lol if we're lucky it will burn Wall Street down to the ground because it's that corrupt!


Foreclosure fraud is ruffling a lot of feathers on Wall Street, and while the full scope of losses remains unclear, even major banks are now acknowledging that this is a multibillion-dollar disaster, not just a set of minor paperwork headaches.

So how bad will it get for Wall Street? There are several disaster scenarios in which the housing market simply shuts down, where the potential losses for Wall Street are simply incalculable. But even situations that do not directly rip apart the basic functioning of the mortgage system could be enough to shut down one or more big banks, creating serious trouble for the financial system, and a major test of the recent Wall Street reform bill.

$900,000 For A 3-Bedroom ... In Haiti?

http://www.npr.org/templates/story/story.php?storyId=130629663

Where is the money from the pledge that the US made to aid Haiti?
How amazing is it that Hilary Clinton can give $500,000. for a stove project, while reneging on a pledge of aid, when there is such a dire need for it?
America where have our priorities gone?
We pay for other countries defense shields, like money was piss water to be poured out where ever the threat of terrorism is a remote possibility of happening, but when it comes to humanitarian aid there seems to be no more piss to pour.
This entire situation of reneging on our own pledge of aid to those who seriously need it, just makes the giving or taking of more Wall Street welfare, just that much harder to swallow.
How sick will it make you this time, when Wall Street rewards itself, for all the grief it's caused the taxpayers of this country as well as the rest of the world?


Meanwhile, of the total pledged, less than 15 percent has been delivered — and still none from the United States. Piles of rubble fill lots and block construction equipment.

The U.S. and others spent millions in humanitarian aid on home-assessment teams, but most of the properties deemed relatively safe remain empty because people cannot afford them. Little has been spent on new homes, with money going for tarps, tents and the sturdier "t-shelters" — made with wood and metal to better withstand wind, rain and tremors.

Hardly anyone has credit for a mortgage or construction loan. Building materials are more expensive than ever. And land title is governed by a broken system ripe for exploitation by speculators looking to cash in on reconstruction — whenever that happens

60 Minutes Brings HFT To The Mainstream, As CFTC Refutes HFT Liquidity-Provisioning Argument

http://www.zerohedge.com/article/60-minutes-brings-hft-mainstream-cftc-refutes-hft-liquidity-provisioning-argument

If America saw this piece last night on 60 Minutes the FED doesn't have a shot in hell of drawing the average American back into the market.
This is just one more ploy of the rigged financial system.
It's all tied together.




Last night on 60 Minutes, Steve Kroft, finally brought mainstream America's attention to the topic that has been the primary scourge of efficient markets over the past 5 years: High Frequency Trading (not to be confused with Signing, aka RoboSigning). In Wall Street: The Speed Traders, Kroft spoke to such advocates of a robot parasite-free as Themis Trading's Joe Saluzzi and (now ex) Senator Ted Kaufman, as well as some other individuals who stand to benefit by computerized feedback loops making a mockery of price discovery, and which have now caused something like ten mini flash crashes in as many days, not counting the Flash Crash itself. Of course, the only defense the HFT lobby continues to use is that it provides liquidity

Batttle Over Home Resale Fees Heads to Congress

http://blogs.wsj.com/developments/2010/10/01/batttle-over-home-resale-fees-heads-to-congress/

This little puppy they are arguing over was a little surprise slipped into the heath care bill, it's a 3.8% sales tax with 1% of that going to the original developer every time the house is sold. What this actually had to do with health care is anybodies guess but then that's how congress works. Utterly amazing isn't it?
http://www.canadafreepress.com/index.php/article/27634

Opponents of a newly-designed fee attached to the sale of homes have succeeded in getting the ear of Congress.

The fees work like this: A builder builds a new home and sells it, then every time the house is subsequently sold, 1% of the sale price bounces back to the developer in the form of a fee paid by the seller. Freehold has said that it intends to securitize the income stream from these fees in order to generate investment capital for new home-building efforts.

Why Be A Market Maker When You Can Just Be A HFT Scalper?

http://www.zerohedge.com/article/why-be-market-maker-when-you-can-just-be-hft-scalper

The average American needs to be fully aware of just how rigged the Wall Street range is.
My advice keep your money in your pocket and don't even go there, you have better odds of winning in Vegas.

The cannibalization of profits courtesy of HFT means very soon everyone will be an HFT! And when that happens, virtually everyone will be on the same side of the trade, until there is a regime change and everyone rushes to the other side, which according to many is precisely what happened on May 6, when the market went bidless. So yes, this is exactly what will happen once again, as more and more of Wall Street realizes that this last loophole to eeking out a few extra pennies per trade is the only place to be. What happens next is anyone's guess, although as the following guest post from Wall St. Cheat Sheet explains, it won't be pretty.

Wall Street Still Doesn’t Have a Sheriff

http://www.nytimes.com/2010/07/26/opinion/26sauer.html

So what it all boils down to is that Wall Street will continue to carry on as it pleases, no matter what the consequences are to not only the United States economy but the worlds as well, justified under the guise, that it's what's best for the investor, who should never be punished over the choices of an "artificial being"
Some how it amazes me that no one has ever thought to unplug the "artificial being"
(retract it's corporate charter)for the safety of mankind.

The question of how best to discipline what Chief Justice John Marshall in 1819 called “an artificial being, invisible, intangible and existing only in contemplation of law” is indeed vexing. A corporation can’t be put in jail, its fines are ultimately paid by investors not responsible for the misconduct, and a court order forbidding future violations merely shelves the issue until the next occurrence.

In 19th-century America, permissive incorporation laws and rapid economic development led to the rise of the large corporation, which, in turn, led to a century of expanding federal regulation. Most measures regulated certain forms of conduct and prohibited others, specifying fines for failure to comply. There was little consideration given to questions of when, as a matter of practical legal policy, an artificial entity should be treated as if it were a person.

The S.E.C. wasn’t forced to grapple with the issue until 1990, when Congress greatly expanded its power to seek financial penalties from corporate violators. (Before then, companies could shrug off civil orders as a passing embarrassment.)

Initially, however, the agency made infrequent use of this new authority. Its staff saw fining public companies as harmful to shareholders, the very people the S.E.C. was created to protect. It also feared that managers would tap their corporate treasuries to buy their way out of individual liability.

Goldman Joins Race to Save Chicago Bank

http://online.wsj.com/article/SB10001424052748703950804575242772016889464.html?mod=WSJ_hpp_LEFTWhatsNewsCollection

Lol is this Goldman's attempt at philanthrope?......LOL yeah right...like that's believable on any level at this point.
So what's the catch.......political persuasion?
Or is there something more serious hidden that the average person can't see upfront?
Enquiring minds definitely want to know, or at least I do anyway


ShoreBank's Distress Galvanizes Wall Street; Blankfein Works Phones to Raise the $125 Million


Goldman Sachs Group Inc. has jumped into an effort to save a Chicago bank whose efforts to expand lending in poor communities have high-profile supporters in Washington and Chicago.

Goldman Chief Executive Lloyd Blankfein has discussed the Wall Street bank making an investment in ShoreBank Corp. with Federal Deposit Insurance Corp. Chairman Sheila Bair, according to people familiar with the situation. He has also telephoned other bank executives as ShoreBank tries to raise $125 million it needs to forestall a possible takeover by the FDIC, people familiar with the discussions say.

Mr.President: UNPLUG THE F-ING COMPUTERS

http://market-ticker.denninger.net/

Remember the movie "War Games"?
"SHaLL we PLAY A GAME?"
THERMAL NULCLEAR WARFARE
Those freaky launch strike screens come to mind.
Yeah sick association I know, but if you think about all those "stop sets" going off as a nuclear launch in someones life, you can see how I got that picture.
The games rigged people and today shows you just how rigged it is.
Karl says you have no recourse.
My mind says BULLSHIT.
This was HUMAN ERROR, who the hell was running the programs?

high-frequency trading and direct-exchange connected computers

The DOW (and other indices) dropped hard. The response in the computers connected directly to the exchanges was instantaneous and produced this:



A computer-driven bid collapse followed and the result was a more than 1,000 point selloff.

I'd be suing somebodies asses BIGTIME. This kind of thing ain't no different than the Honda thing. It's time to MAN up (now that corporations are equal to a human entity), they need to own up to the financial harm that they imposed upon others through there insatiable need to feed their greed.
The buck stops WHERE?

This sort of thing has to be stopped.

This was not humans - it was pure computer algorithm trading. If you had stops set, you got blown out way below any reasonable trading range with no recourse. Margin requirements were raised instantly on futures which sure didn't help.

This was essentially the 1987 program-trading crash powered by the fastest CPUs money can buy, and points out that these systems do not have social utility and at times like this they are unbelievably destructive.

The banks and others who have argued for innovation have just proved once again that their brand of "innovation" means that the average investor gets bent over the table. You cannot, as an investor, be in the market until these outrageous practices are permanently barred from the exchanges.

I was on the right side of the destruction today, but I could have very easily been on the wrong side and gotten badly hurt. As it stands I'm quite certain there were tens of thousands of individual traders who went so far into negative equity in the futures market and got immediately liquidated that we will be hearing of blown up accounts and bankrupted traders for weeks if not months.

To those who say that we have "restored confidence" in the markets and "the worst is beyond us", I want everyone to remember very carefully the early 2007 market collapse that originated in Asia and came over here - the event that began my writing of The Ticker.

When governments tamper with markets as has been done over the last year and change to the point that true liquidity leaves and is replaced by computer-driven volume, this is what happens as there is NO UNDERLYING BID.

VOLUME IS NOT LIQUIDITY. Liquidity creates volume but not the other way around. We have deluded ourselves into believing that a handful of major banks passing shares between each other funded with zero percent loans equals "liquidity."

Fight the Derivatives Cancer with a Wall Street Sales Tax, Plus Bans on Hedge Funds, Credit Default Swaps, and Synthetic CDOs

http://tarpley.net/2010/04/25/fight-the-derivatives-cancer-with-a-wall-street-sales-tax-plus-bans-on-hedge-funds-credit-default-swaps-and-synthetic-cdos/

As a country that wishes to maintain our sovereignty we can no longer afford to overlook our own downfall, because it's plainly staring us in the face.
The games of speculation that the rich play behind the curtain place no value on human life. It's all only about the numbers in dollar signs and they create those numbers anyway they can and use our lives to do with as well as to bail them out when they fail. They only live because "WE" let them.
It's time to end this game before it ends all of us. As "the world's people", "WE" owe it to our selves.


The urgent problem raised by all this is the $1.5 quadrillion derivatives bubble. The financial crisis which struck the United States and the world in September and October 2008 was in fact a world a derivatives panic. This panic marked the first phase of a world economic depression caused by derivatives speculation. The second phase of this depression, which is now beginning, can also be attributed in large part to derivatives, since derivatives are the main tool being used in the speculative attacks on Greece, Spain, Portugal, Italy, Ireland, and other nations, building up towards a chaotic collapse of the euro.

Derivatives are the Cause of the World Depression of Our Time
Far from being some arcane or marginal activity, financial derivatives have come to represent the principal business of the financier oligarchy in Wall Street, the City of London, Frankfurt, and other money centers. A concerted effort has been made by politicians and the news media to hide and camouflage the central role played by derivative speculation in the economic disasters of recent years. Journalists and public relations types have done everything possible to avoid even mentioning derivatives, coining phrases like “toxic assets,” “exotic instruments,” and – most notably – “troubled assets,” as in Troubled Assets Relief Program or TARP, aka the monstrous $800 billion bailout of Wall Street speculators which was enacted in October 2008 with the support of Bush, Henry Paulson, John McCain, Sarah Palin, and the Obama Democrats.

Only in America

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/7564598/Fed-boss-Greenspan-says-no-one-saw-the-crisis-coming.-Really.html


Only in America. Only in America would it be possible to spawn a financial crisis so devastating that it would collapse the entire world economy.


Only in America could the man responsible for interest rates and banking regulation at the time, Alan Greenspan, incredulously insist, as he has again in testimony to the Financial Crisis Commission, that he had very little to do with it.

And only in America could you imagine the story of a one-eyed neurology intern with undiagnosed Asperger's Syndrome (no not Gordon Brown) who ended up making a fortune by applying the principles of "value investing" to subprime mortgage lending. Greenspan says no one saw it coming. Well, this man did.


Everyone has heard of Warren Buffett, the modern day master of "value investing", and most will recognise the name of John Paulson, the hedge fund manager who famously made billions riding the credit crunch storm.

But not many will know of Dr Mike Burry, a one time neurologist who according to a new book* by the former bond salesman Michael Lewis, predicted the crisis almost exactly and persuaded Wall Street to create the instruments that would allow him to capitalise on it.

Justice Department eyes possible fraud on Wall Street

http://www.mcclatchydc.com/251/story/82408.html

Oh check it out, now their creating a Financial Fraud division, I guess the DoJ just didn't believe the FBI in 2004.
Talk about covering your ass as an after thought.


Turning its scrutiny to bigger fish in the subprime mortgage scandal, the Justice Department is investigating whether lenders or Wall Street firms defrauded investors in the sale of risky mortgage securities, its Criminal Division chief disclosed Thursday.

"We absolutely are looking at the conduct of the securitizers themselves, and what did they say to those who purchased the (securities)," Assistant Attorney General Lanny Breuer told a commission created by Congress to investigate causes of the nation's economic collapse.

"Candidly, (we) have been looking at that for awhile and are looking at that right now in a very key matter

How Moody's sold its ratings -- and sold out investors

http://www.mcclatchydc.com/227/story/77244.html



-- As the housing market collapsed in late 2007, Moody's Investors Service, whose investment ratings were widely trusted, responded by purging analysts and executives who warned of trouble and promoting those who helped Wall Street plunge the country into its worst financial crisis since the Great Depression.

A McClatchy investigation has found that Moody's punished executives who questioned why the company was risking its reputation by putting its profits ahead of providing trustworthy ratings for investment offerings.

Instead, Moody's promoted executives who headed its "structured finance" division, which assisted Wall Street in packaging loans into securities for sale to investors. It also stacked its compliance department with the people who awarded the highest ratings to pools of mortgages that soon were downgraded to junk. Such products have another name now: "toxic assets

AFL-CIO, Dems push new Wall Street tax

--------------------------------------------------------------------------------
http://thehill.com/homenews/house/56...all-street-tax

The nation’s largest labor union and some allied Democrats are pushing a new tax that would hit big investment firms such as Goldman Sachs reaping billions of dollars in profits while the rest of the economy sputters.

The AFL-CIO, one of the Democratic Party’s most powerful allies, would like to assess a small tax — about a tenth of a percent — on every stock transaction.

Small and medium-sized investors would hardly notice such a tax, but major trading firms, such as Goldman, which reported $3.44 billion in profits during the second quarter of 2009, may see this as a significant threat to their profits.


“It would have two benefits, raise a lot of revenue and discourage speculative financial activity,” said Thea Lee, policy director at the AFL-CIO.

Kohn warns Congress on meddling in Fed's affairs

--------------------------------------------------------------------------------
http://www.reuters.com/article/wtUSI...45907120090709


The U.S. Federal Reserve on Thursday launched a robust defense of its independence and warned that efforts in Congress to put monetary policy under political sway would hurt the economy.

Fed Vice Chairman Donald Kohn said opening up some of the U.S. central bank's most sensitive decisions to political scrutiny could result in higher long-term interest rates and hurt the United States' credit rating. Kohn was speaking before a Congressional panel where he was seeking to beat back a proposal that would open policy decisions by the U.S. central bank to audits by a federal watchdog agency.

"Any substantial erosion of the Federal Reserve's monetary independence likely would lead to higher long-term interest rates as investors begin to fear future inflation," he said in testimony prepared for delivery to a House of Representatives Financial Services subcommittee.

Kohn's testimony comes as Congress debates President Barack Obama's plan for regulatory reform, which envisions the Fed taking on an expanded role monitoring risks across the entire financial system to help ward off future financial crises.

The proposal has increased calls for greater accountability at the central bank, which was already facing heavy scrutiny from lawmakers angered by its role in bailing out Wall Street.

Public anger over last year's financial crisis and Fed-backed bailouts of investment bank Bear Stearns and insurer American International Group has created a popular backlash that could gain momentum in Congress.

A bill put forward by Representative Ron Paul, a Texas Republican, would expose the Fed's decisions on monetary policy and emergency lending to audits by the Government Accountability Office. It has won support from a majority in the House of Representatives.

The GAO is currently prohibited from auditing these areas