"Many People on Wall Street Knew" Bernie Was a Crook, Madoff Author Says

"Many People on Wall Street Knew" Bernie Was a Crook, Madoff Author Says

Optimism fading

Optimism fading
(01:53) Report

Jul 2 - The Dow closed lower for the third consecutive week as larger-than-expected job cuts added to signs a U.S. economic recovery could be sluggish.
Conway Gittens reports.

"Extraordinarily Evil": Judge Brings 150-Year Hammer Down on Madoff

"Extraordinarily Evil": Judge Brings 150-Year Hammer Down on Madoff

In sentencing Bernie Madoff to the maximum 150-year prison term Monday, U.S. District Judge Denny Chin cited the "extraordinarily evil" nature of his crimes.

"Here the message must be sent that...this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll," Judge Chin said.

The ruling provided some solace to Madoff's victims who cheered the sentencing. Several Madoff investors spoke at the hearing and "without exception, attacked Madoff as an unfeeling, horrible, relentless pursuer of their money and souls," says Allan Dodds Frank, a veteran journalist and DailyBeast.com correspondent.

In the accompanying video, Frank recounts the "intensity" of the courtroom, how Madoff "pretty impassively" reacted to the sentence, and how quickly he moved when facing his victims. "If you blinked, you missed it," he says.

A specialist in white-collar crime, Frank said the 150-year sentence almost certainly means Madoff isn't going to any "country club" prison, although that's up the Bureau of Prisons to ultimately decide.

"A sentence of more than 30 years generally means you go to high security if not a super-maximum," Frank says. "150 years? It's hard to say he doesn't go to one of those facilities. They are not a picnic. Even medium-security Federal prison, you're still in with a lot of dangerous people."

Bernanke vs. Buffett: Who's Right on the Economy?

Bernanke vs. Buffett: Who's Right on the Economy?

Fears of big bank problems return

Fears of big bank problems return
A key market measure of credit risk is deteriorating again, as investors fret over the side effects of giant federal bailouts for the nation's largest banks.

NEW YORK (Fortune) -- Betting against the banks is back in fashion.

A key market measure of the health of the biggest global financial institutions has deteriorated this month, after showing sharp improvement in April and May.

The price of betting that big banks will default on their debt -- made via derivatives known as credit default swaps -- has risen 17% in June, according to data from New York-based Credit Derivatives Research.

The uptick in wagers against banks such as Bank of America (BAC, Fortune 500), Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) comes as the spring's scorching stock market rally peters out and doubts about the health of the global economy and the banking sector re-emerge.

The blue-chip S&P 500 has dropped 6% over the past two weeks, with half of that loss coming this week. The KBW Bank index has slid 20% since hitting a recent high May 11.

Some selling is no doubt inevitable after a strong rally. But a World Bank report Monday that predicted the global economy will shrink 2.9% this year "touched a raw nerve," said Mauro Guillen, director of the Lauder Institute at the University of Pennsylvania's Wharton School.

"We have been too optimistic for too long, and we still haven't done the dirty work of fixing the financial system," he said.

Guillen said the U.S. will have to take action to restore the credit system before the economy can resume expanding in earnest.

That will mean actually implementing plans such as the one the government proposed this spring to attract private sector buyers of troubled bank assets, Guillen said. Regulators shelved one such program earlier this month.

Guillen also advocates pushing financial regulatory reform program through Congress.
But Robert Claassen, chair of the derivatives and structured products practice at international law firm Paul Hastings, said he senses the momentum for sweeping change has ebbed in recent weeks.
"There's a lot less public outrage right now," he said.
Guillen shares that view, and said it bodes ill for the long anticipated economic rebound. He notes that the economy must start growing again before unemployment -- rapidly approaching 10% -- comes down to a more moderate level.
"We have reached this period of apathy, and there's a real danger that the economy will languish with the underlying problems unaddressed," he said.

Fear of failure replaced by fear of weak earnings. Read on...
http://money.cnn.com/2009/06/24/news/companies/banks.bets.fortune/index.htm?postversion=2009062404

Forget About Iran, Canada a Bigger Risk to Oil Market, Energy Trader Says

Forget About Iran, Canada a Bigger Risk to Oil Market, Energy Trader Says

The eyes of the world are fixed on the election protests in Iran. Yet, while unrest reigns in one of the world’s largest oil producers, crude prices have actually fallen below $70 a barrel. Stephen Schork, editor of The Schork Report, says that’s because traders have already priced in the risk.

Get this: The big risk to prices, Schork says, comes from our friendly neighbors to the north. Canada is America’s biggest supplier of oil - most of it coming from tar sands. The problem, according to Schork, is that the Obama administration has taken “a rather belligerent stance” toward that supply because it’s not environmentally friendly. If the administration increased taxes on Canadian oil it “could be displaced...that will have an uplift to prices,” he goes on to say.

And, don’t forget the risk south of the border. Maturing oil fields, drug cartels and political instability in Mexico have the potential to drive up prices. If the U.S. doesn’t pay more attention to these risk factors, investment will continue to dry up and leave us paying more at the pump, Schork warns.

So while everyone is focused on geopolitical “hot-spots” like Iran, Nigeria and Venezuela, the real risk to crude prices may be much closer to home.

Treasury Department Issues Emergency Recall Of All US Dollars

Treasury Department Issues Emergency Recall Of All US Dollars


Treasury Department Issues Emergency Recall Of All US Dollars

U.S. Numbers on Welfare See Sharp Increase

U.S. Numbers on Welfare See Sharp Increase

(Source Wall Street Journal)
Welfare rolls, which were slow to rise and actually fell in many states early in the recession, now are climbing across the country for the first time since President Bill Clinton signed legislation pledging "to end welfare as we know it" more than a decade ago.
Twenty-three of the 30 largest states, which account for more than 88% of the nation's total population, see welfare caseloads above year-ago levels, according to a survey conducted by The Wall Street Journal and the National Conference of State Legislatures. As more people run out of unemployment compensation, many are turning to welfare as a stopgap.

The biggest increases are in states with some of the worst jobless rates. Oregon's count was up 27% in May from a year earlier; South Carolina's climbed 23% and California's 10% between March 2009 and March 2008. A few big states that had seen declining welfare caseloads just a few months ago now are seeing increases: New York is up 1.2%, Illinois 3% and Wisconsin 3.9%. Welfare rolls in a few big states, Michigan and New Jersey among them, still are declining.

The recent rise in welfare families across the county is a sign that the welfare system is expanding at a time of added need, assuaging fears of some critics of Mr. Clinton's welfare overhaul who said the truly needy would be turned away. Read more... http://online.wsj.com/article/SB124562449457235503.html

Obama Poll Sees Doubt on Budget and Health Care

U.S. / Politics
Obama Poll Sees Doubt on Budget and Health Care (New York Times Permalink)
By JEFF ZELENY and DALIA SUSSMAN Published: June 18, 2009
The latest New York Times/CBS News poll found a distinct gulf between President Obama’s overall standing and how some of his key initiative are viewed.

Big banks still not lending

Big banks still not lending
Loan volume at the 21 largest recipients of government funding fell 7% during the month of April, according to a survey by the Treasury Department.

NEW YORK (CNNMoney.com) -- Lending at the nation's top banks slowed in April, according to a government report published Monday, driven in part by continued deterioration in the U.S. economy.

The dollar amount of new loans issued by the 21 biggest recipients of taxpayer funds under the government's Troubled Assets Relief Program, or TARP, fell 7% to $273 billion from nearly $295 billion during the month of March.

Regulators attributed part of the decline to lower demand for new commercial and industrial loans, which fell nearly 29% during the month as U.S. businesses broadly avoided acquisitions, building plants and buying inventory.

Weakness was also notable across a wide variety of consumer loan categories, including first mortgages and credit cards. Of the 21 banks that took part in the survey, 15 reported a decline in loan originations, according to the Treasury Department.
Banks have been under pressure to increase lending since the government provided billions of dollars in aid to help prop up the industry last fall.
Consumers and businesses continue to argue that credit remains tough to come by, but banks maintain they are lending even as the appetite for new loans has dropped.
Instead, consumers seemed to be focused on paying down debt in April, regulators said Monday. The total amount of outstanding loans in the survey fell 0.8% to $4.34 trillion from $4.38 trillion in March.
One new feature of the monthly survey was a reading on small business lending. The government said that the amount of new small business loans was roughly $8 billion in April, although it did not provide numbers for small business lending from the previous month.
http://money.cnn.com/2009/06/15/news/companies/tarp_banks_lending/index.htm?postversion=2009061516

VEB vergelijking: Today's Brokers voordeligste internetbroker, Rabobank duurste

Today's Brokers voordeligste internetbroker, Rabobank duurste

Beleggen via internet is het voordeligst bij Today's Brokers. Rabobank rekent de hoogste kosten. Gemiddeld zijn beleggers via internet nu tot negen procent goedkoper uit dan vorig jaar. Vooral ING, vorig jaar de duurste optie, heeft de kosten fors verlaagd.

Dat blijkt uit het jaarlijks onderzoek van de VEB naar de kosten van beleggen via internet.
Today's Brokers was ook vorig jaar de internetbroker met de laagste kosten. Internetbeleggen via de Rabobank is het duurst. Vorig jaar bleek ING online klanten de hoogste kosten te berekenen maar door recente prijsverlagingen is de laatste plaats nu overgedaan aan Rabobank, dat in een flink aantal gevallen zelfs duurder is geworden dan vorig jaar.

Het onderzoek
De VEB vergeleek de kosten van een jaar beleggen voor 3 typen beleggers op de Amsterdamse beurs, elk met een effectenportefeuille bestaande uit aandelen in 15 verschillende beursfondsen ter waarde van 100.000 euro en opties ter waarde van 10.000 euro. De beleggers verspreiden hun transacties gelijkelijk over vier transacties: aandelenorders van 4.000 en 8.000 euro en optietransacties van 2 en 5 contracten.

De actieve belegger voert op jaarbasis 26 van elk van deze transacties uit (104 in totaal), de matig actieve 6 (24 in totaal) en de passieve 1 (4 in totaal). Het onderzoek houdt rekening met bewaarloon, vaste lasten, transactiekosten voor aandelen en opties en kortingen voor zover deze van toepassing zijn.

Voor alle modelbeleggers bleek Today's Brokers de goedkoopste, op de voet gevolgd door Lynx. Het verschil tussen beide internetbrokers is, vergeleken met 2008, groter geworden, omdat Lynx de tarieven ongewijzigd heeft gelaten, terwijl Today's ze heeft verlaagd. Bij Rabobank zijn alle modelbeleggers het duurste uit. Ondanks de uitkomst van het onderzoek in 2008, Rabobank bleek toen ook al relatief duur, is de Rabobank voor passieve en matig actieve beleggers duurder geworden.

In 2008 lagen de kosten van ING Bank veel hoger dan van de andere aanbieders, terwijl Postbank een aardige middenmoter bleek. Beide banken werden begin dit jaar samengevoegd. Dit jaar blijkt ING voor alle modelbeleggers niet alleen goedkoper dan ING Bank vorig jaar, maar ook goedkoper dan de Postbank.

Gemiddeld genomen zijn de kosten van internetbeleggen dit jaar gedaald, maar liefst vier aanbieders bleken voor alle modelbeleggers goedkoper geworden. Zie conclusies...
http://www.veb.net/content/HoofdMenu/Home/Nieuwsdossier/onderzoeken/brokeronderzoek2009.aspx

European stocks fall after grim industrial data

European stocks fall after grim industrial data
European markets fall after grim industrial data, ahead of expected subdued US open

http://finance.yahoo.com/news/European-stocks-fall-after-apf-15509211.html?sec=topStories&pos=3&asset=&ccode=

Germany's DAX fell 23.89 points, or 0.5 percent, to 5,083.37 and the CAC-40 in France was 2.65 points, or 0.1 percent, lower at 3,332.29.

The European Union's statistics office Eurostat revealed that industrial production in the 16 countries that use the euro slumped by 1.9 percent in April from the previous month. That was way more than the 1 percent decline expected in the markets and stoked worries that the recession in the euro zone may not yet have bottomed out, as some had hoped.

"April's euro-zone industrial production figures provide few signs that the negative effects from destocking and the collapse in global trade are waning," said Ben May, European economist at Capital Economics.

Industrial production plays a particularly important role in the European economy and its recovery, whenever it comes, will provide a clear indication that the worst of the recession is over.

Sharply lower industrial output was blamed for the massive 2.5 percent quarterly fall in the euro zone's first quarter gross domestic product. The recession in Germany, the euro zone's biggest economy, was even greater as demand for its high-value exports, such as cars and heavy machinery, slumped amid the collapse in global trade.

Meanwhile, the FTSE 100 index of leading British shares was down 12.57 points, or 0.3 percent, at 4,449.30 with Barclays PLC down around 3 percent after it confirmed the sale of its global investment unit to U.S. fund manager BlackRock Inc. for $13.5 billion.

American Consumer: Down But Not Out

American Consumer: Down But Not Out

U.S. retail sales edged up 0.5 percent in May, sparked in part by deep discounts, notably in autos. Definitely goods news, indicating the U.S. consumer is recovering. On a related note of optimism, home-improvement retailer Home Depot said fiscal year earnings may not fall as much as feared.

And yet another sign of the shifting consumer: investors are dipping into equities again. Long-term mutual funds have had positive inflows for 12-straight weeks, according to Investment Company Institute.

But reality looks more like a search for a "new normal," as noted by Mohammed El-Erian, CEO and co-CIO of Pimco. Case in point the U.S. auto sector: U.S. auto sales peaked at 17 million in 2005, but a new normal of 10 to 12 million a year going forward seems more likely and hopeful.

So the consumer may be coming out of the bunker, but with unemployment on the rise and debt levels still very high, don't expect a recovery to the free-spending days of a few years ago anytime soon.
http://finance.yahoo.com/techticker/article/262652/American-Consumer:-Down-But-Not-Out

California Has 50 Days to Live

California Has 50 Days to Live
From The Business Insider, June 2, 2009:

California officially has a drop-dead date now. State Controller John Chiang told Arnold Schwarzenegger last night that the state has 50 days before it hits a financial meltdown. So in that time, it either needs a bailout, massive budget cuts, or a brand new bubble (green tech, internet, real estate, something like that).
The tax revenue numbers are not at all good for the green shoots crowd:
Reuters: Underscoring the severity of California's cash crisis, Controller John Chiang, who has previously warned the state's government risks running out of cash without a budget deal, said revenues in May fell by $1.14 billon, or 17.7 percent, from a year earlier.
Additionally, the revenues of the government of the most populous U.S. state fell short of estimates in Schwarzenegger's budget plan by $827 million, Chiang said.
Of all three outcomes, we'd say the federal bailout is the most likely, sinse surely a California collapse would kill any recovery.
Yesterday, the Economist's Free Exchange blog argued that, indeed, California is too big to fail. And though we're deeply uncomfortable with the concept, under the general notion of that idea, we'd say they're probably right:
California is the world's eighth largest economy, and it contributes roughly an eighth of total American output (and drives much of the output in surrounding states). It's very difficult to imagine the European Union standing by and allowing a budget crisis to ravage the German economy, or the IMF doing nothing at all to assist a Russia or a Brazil as they melted down.

Were California forced to make significant cuts to its spending, the ramifications could be quite serious. School systems and universities would be endangered (which would threaten the state's long-term economic prospects). Increases in crime, homelessness, and serious poverty would encourage residents to leave. Service cuts could threaten key industries. In short, the recession could grow far more serious in the state than it already is. That would threaten recovery across the nation.
See article..
http://finance.yahoo.com/tech-ticker/article/262207/California-Has-50-Days-to-Live?tickers=dia,spy,CB,NVC,IQC,NXC,BJZ?sec=topStories&pos=5&asset=&ccode=

IEA Raises Oil Outlook for First Time in 10 Months

IEA Raises Oil Outlook for First Time in 10 Months

June 11 (Bloomberg) -- The International Energy Agency raised its global oil-demand forecast for the first time in 10 months on signs that the economic slowdown is abating.

The adviser to 28 nations increased its global oil demand estimate for this year by 120,000 barrels a day to 83.3 million barrels a day, driven by consumption in U.S. and China. Consumption worldwide will contract by 2.9 percent from last year, the biggest drop since 1981, the agency said in its monthly report today.

“These revisions do not necessarily imply the beginnings of a global economic recovery, and may only signal the bottoming out of the recession,” the Paris-based agency said. “It’s a fairly modest uptick. Underlying demand levels remain weak.”

Oil prices have climbed 61 percent this year. They traded above $72 a barrel in New York today for the first time in seven months on growing optimism about an economic recovery and as a weaker dollar drives investors toward commodities. Futures in New York rebounded to a seven-month high of $72.30 after the release of the report from as low as $71.32 earlier in the day.

Confidence in the world economy rose for a third month as U.S. job losses slowed and global production improved, a Bloomberg survey of users showed yesterday. A U.S. Labor Department report on June 5 showed the country lost the fewest number of jobs since September last month.
Tighter Fundamentals

Rallying crude prices have been driven by both tighter supply-demand fundamentals and “short-term flows” of speculative capital, David Fyfe, head of the IEA’s oil industry and markets division, said in a phone interview from Paris.

Analysts expect prices to average $61 a barrel in the fourth quarter of this year, according to the median of forecasts compiled by Bloomberg. Goldman Sachs Group Inc. said this month it expects oil to reach $85 by the end of the year,

The outlook for 2009 consumption in the most industrialized countries, the Organization for Economic Cooperation and Development, was raised “marginally” to 45.2 million barrels a day. Inventories of crude and refined products in these nations amounted to 62 days of demand as of the end of April.
Read Article...
http://www.bloomberg.com/apps/news?pid=20601087&sid=a0JQcQcnQLFs

Are Inflation Concerns Inflated?

Are Inflation Concerns Inflated?
6/3/2009

Amid new pronouncements that inflation is a looming possibility, WSJ's Economic Editor David Wessel explains the unlikely conditions that would spur inflation in the U.S.

What Obama Needs to Do to Get the U.S. Off Oil -- for Good

What Obama Needs to Do to Get the U.S. Off Oil -- for Good

The next great crisis: America's debt

The next great crisis: America's debt
At this rate, your share of the load will be $155,000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse.

(Fortune Magazine) -- Normally Paul Krugman, the liberal pundit and Nobel laureate in economics, and Paul Ryan, a conservative Republican congressman from Wisconsin, share little in common except their first names and a scorching passion for views they champion from opposite political poles. So when the two combatants agree on a fundamental threat to the U.S. economy, Americans should heed this alarm as the real thing. What's worrying both Krugman and Ryan is the rapid increase in the federal debt - not so much the stimulus-driven rise to mountainous levels in the next few years, but the huge structural deficits that, under all projections, keep building the burden far into the future to unsustainable, ruinous heights. "The long-term outlook remains worrying," warned Krugman in his New York Times column. Krugman strongly supports President Obama's spending plans but bemoans the shortfall in taxes to pay for them.

Ryan flays the administration for piling new spending on top of already enormous deficits. "This isn't a temporary stimulus but a ramp-up in debt followed by a greater explosion in spending and debt," he told Fortune, predicting a day when America's creditors will start viewing the U.S. Treasury as a risky bet. "The bond markets will come after us with a vengeance. We're playing with fire." Krugman favors far higher taxes, while Ryan wants to curb spending, but for now what's so big and so dangerous that it distresses such diverse types as Krugman and Ryan - and should scare all Americans - is the Great Debt Threat.
The bill is far too big for only the rich to pick up. There aren't enough of them. America will have to lean on citizens far below the $250,000 income threshold: nurses, electricians, secretaries, and factory workers. Within a decade the average household that pays income tax will owe the equivalent of $155,000 in federal debt, about $90,000 more than last year. What the Obama administration isn't telling Americans is that the only practical solution is a giant tax increase aimed squarely at the middle class. The alternative, big cuts in spending, aren't part of the President's agenda. To keep the debt from wrecking the economy, the U.S. would need to raise annual federal income taxes an average of $11,000 in 2019 for all families that pay them, an increase of about 55%. "The revenues needed are far too big to raise from high earners," says Alan Auerbach, an economist at the University of California at Berkeley. "The government will have to go where the money is, to the middle class." The most likely levy: a European-style value-added tax (VAT) that would substantially raise the price of everything from autos to restaurant meals.
Read Article...
http://money.cnn.com/2009/06/05/retirement/next_crisis_americas_debt.fortune/index.htm?postversion=2009060914

Obama expedites stimulus

Obama expedites stimulus
(02:15) Report Reuters Video

Jun. 8 - President Obama is expediting the economic stimulus package that Congress passed in February in order to create 600,000 jobs over the next 100 days.

SOUNDBITES:
# U.S. President Barack Obama
# Dan Mitchell, senior fellow at the libertarian Cato Institute,Jon Decker reports.

Business Update: Auto deal halted

Business Update: Auto deal halted
(01:48) Report Reuters Video

Jun. 8 - The U.S. Supreme Court upheld a ruling that puts the sale of American car maker Chrysler to Italy's Fiat in jeopardy.
Conway Gittens reports.




Business New York Times Permalink
Supreme Court Delays Sale of Chrysler to Fiat
By MICHAEL J. de la MERCED Published: June 9, 2009
If the U.S. Supreme Court decides to hear an appeal that lasts weeks or months, it could put Chrysler at risk of going out of business.