Tuesday, December 30, 2008

ACM leaves NFA, shuts down US ops, opens bank in Switzerland

Important Notice from ACM USA


ACM USA's white-label licensor, ACM – Advanced Currency Markets SA ("AC-Markets"), announces another milestone in its already impressive and successful history: the formation and creation of ACM Bank. The ACM Group proudly announces the planned reorganization of the ACM Family under the new ACM Bank.

In an effort to ensure greater security, safety, and enhanced banking and investment services to their clients, ACM Group is in the process of applying for its Swiss banking license.

As a result, for the short term ACM USA will no longer be an active NFA member. This means that ACM USA will no longer act as a counterparty to forex positions and will not continue to service client accounts. Instead, ACM USA will remain a licensed office to AC-Markets assisting in the opening of forex trading accounts directly with AC-Markets and in the future with ACM Bank. AC-Markets is not a National Futures Association ("NFA") member firm and cannot accept U.S. customers until the approval of its Banking license.

Please note the coming date which is of importance to your ACM USA forex trading account.

  • On January 8, 2009 at 9:00 a.m. EST, all open forex positions and accounts will be closed at the prevailing market price.

You may continue to trade or close your ACM USA account until the above mentioned date. However, should you not take any action before the above mentioned date, your account will be closed and the account balance will be returned to you by check.

If you have any questions or concerns please do not hesitate to contact our office at (212) 758-7200 or customersupport@acmusa.com.

Best Regards


Click here for a Withdrawal Request Form that can be sent via fax (646) 308-9262

Pound Falls to 98 Pence Per Euro for 1st Time on Housing Slump

Dec. 29 (Bloomberg) -- The U.K. pound weakened to a record 98 pence per euro after an industry report said house prices will probably extend declines next year, boosting the case for deeper interest-rate cuts by the Bank of England.

Britain's currency also dropped versus 14 of its 16 most- traded counterparts, falling for a second day against the Swiss franc and tumbling to a 14-year low against Japan's yen. Property research company Hometrack Ltd. said U.K. house values slid 8.7 percent this year, led by a 10.1 percent drop in London, and that prices will "inevitably" decline in 2009.

Tue Dec 30 00:59:00 2008(EST)

* 30 Dec 08: 05:59(SGA) - FX NOW! EUR/CHF, USD/CHF Flows : Thin year end markets, focus on Israel/ Gaza attacks

Thin markets, exaggerated moves as Japan closed early for New Year holidays. USD/JPY dipping to 90.10-15 from 90.20-25, and USD/CHF to 1.0515-20 from 1.0530-40, and EUR/CHF trading around 1.4845-50. Focus still on the ongoing Israel/ Hamas fighting. USD/CHF off its 5-month lows of 1.0370 seen yesterday, while EUR/CHF off the 6-week lows of 1.4758 seen yesterday, lowest since November 12 lows of 1.4705. WL

Saturday, December 27, 2008

Russia is bracing for further unrest and other info

http://www.ft.com/cms/s/0/fb228bfa-d385-11dd-989e-000077b07658.html?nclick_check=1 Russia is bracing for further unrest as the rouble on Friday slid to a new low against the euro after a succession of moves to devalue its currency.

At at time when transparency and accountability in financial markets are of the utmost critical importance to the nation, the Securities and Exchange Commission has just announced on December 23rd that it will substantially bump up the fees it charges for records requests in the guise of recouping its costs.


Search and review fees will be bumped up from the two categories:  16 and 28 dollars per hour to categories of 26, 40 and 70 dollars per hour.

Now, commercial developers are trying to pony up to the taxpayer trough. These egotists used immense amounts of short term debt to overpay for malls, office towers, hotels and apartment complexes. The rental income could never cover the interest expense on the debt. The only way they could possibly make money was if the next moron developer was foolish enough to overpay for the same assets. The market was flying high as the MBA geniuses on Wall Street were able to work their magic by slicing this debt into tranches, getting it rated as investment grade paper by criminally negligent Moody's and S&P, and reselling it to gullible investors throughout the world.    http://www.marketoracle.co.uk/Article7972.html


Housing market crash has led to 32,000 estate agents losing their job


Wall Street Journal: "This will go down as one of the worst holiday season on record . . . even more dire than had been expected"


Price-slashing failed to rescue a bleak holiday season for beleaguered

retailers, as sales plunged across most categories on shrinking consumer

spending, according to new data released Thursday. Despite a flurry of

last-minute shoppers lured by the deep discounts, total retail sales fell

over the year-earlier period by 5.5% in November and 8% in December

through Christmas Eve, according to MasterCard Inc.'s SpendingPulse unit.

Considering individual sectors, "This will go down as the one of the worst

holiday sales seasons on record," said Mary Delk, a director in the retail

practice at consulting firm Deloitte LLP. "Retailers went from 'Ho-ho' to 'Uh

oh' to 'Oh-no.'" The holiday retail-sales decline was much worse than the

already-dire picture painted by industry forecasts, which had predicted

sales ranging from a 1% drop to a more optimistic increase of 2.2% . . .




Thursday, December 25, 2008

one third of banks to fail in 2009

Silva tells CNBC up to a thousand face failure or forced merger

Wednesday, December 24, 2008

Financial analyst Ralph Silva of TowerGroup told CNBC this morning that he expects no less than one third of banks to fail in 2009 and that anything up to a thousand could collapse if they don't merge.

Silva said that only five or six global banks have enough funds to survive comfortably throughout 2009.

"The rest of the banks, and that means a thousand other banks, don't have enough money to get themselves through 2009," added Silva.

"In 2009 we're gonna see one third of the banks in the G8 countries disappear, either being merged, forced or not forced, or completely disappearing," said Silva.

The analyst predicted that rather than letting banks fail, governments will force them to merge, citing the example of Bradford and Bingley in the UK, which would lead to "very few banks owning quite a bit more."

Silva warned that banks would not be able to lend any money throughout 2009 because they would be more concerned with merely surviving and being able to pay their own employees.

Monday, December 22, 2008

FX the only game in town

Bonuses of Currency Traders Fall Least on Wall Street (Update3)

By Liz Capo McCormick

Dec. 22 (Bloomberg) -- The most volatile foreign-exchange markets since at least 1992 means currency traders will see the smallest pay cuts as the worst financial crisis since the Great Depression wipes out bonuses on Wall Street.

While bonuses, which account for the bulk of annual pay for traders and investment bankers, will fall an average 45 percent this year, currency traders will see declines of about 15 percent from 2007, the least of any department, according to Options Group, a New York-based consulting firm. Top executives at New York-based Goldman Sachs Group Inc., Morgan Stanley and Merrill Lynch & Co., gave up their bonuses as banks reported $1 trillion in writedowns and losses since the start of last year.

The biggest drop in the Standard & Poor's 500 Index since 1931, a $100-a-barrel collapse in oil prices and the largest losses in corporate debt led to 200,000 job cuts at banks around the world. Yet data from the Comptroller of the Currency show foreign-exchange trading revenue at U.S. commercial banks rose 66 percent in the second quarter from a year earlier. Trading accelerated after the collapse of Lehman Brothers Holdings Inc. in September.

"Our team had been working long hours all year, but the days grew exponentially" after the Sept. 15 bankruptcy filing of New York-based Lehman, said Russell LaScala, head of North America foreign exchange at Deutsche Bank AG in New York.

Foreign-exchange desks of Frankfurt-based Deutsche Bank and UBS AG of Zurich, the world's two largest currency traders, posted three consecutive quarters of record revenue from foreign exchange, according to quarterly earnings reports. The firms didn't break out the revenue figures.

'Robust' Business

A trader who has been a vice president for three years will get on average a bonus of $350,000 to $450,000, according to Options Group, which started tracking pay and hiring more than a decade ago. Global heads of foreign exchange trading will receive average bonuses of $3.5 million to $4.5 million, down 10 percent from last year.

"The top performers' bonuses are going to be cut conservatively because they had record years, like the foreign exchange people," said Bob Reed, co-chief operating officer and co-founder of the Options Group. "I see no limitations on volatility, so that business will go forward pretty robustly."

Volatility, which fuels increased trading and revenue for banks, surged to record levels in the weeks following Lehman's bankruptcy as investors unwound holdings of higher-yielding assets to repay low-cost yen- and dollar-denominated loans.

Implied Volatility

So-called implied volatility on options for major exchange rates reached a record 26.55 percent on Oct. 24, from this year's low of 9.27 percent in August, according to data compiled by New York-based JPMorgan Chase & Co. Traders use implied volatility to gauge expectations for currency swings and in setting options prices.

The bank's index, which began tracking implied volatility on three-month options in June 1992, averaged 8.87 percent for the five years prior to the collapse of the subprime mortgage market in September 2007. The index was 20.88 percent today.

"The spike in market volatility led to wider spreads and higher trading volumes, driven by both hedging and risk management needs," said Fabian Shey, global co-head of foreign exchange and money markets at UBS in London. "Facing pronounced movements in underlying equity markets and also currency markets, asset managers had an increased need for currency hedging."

Foreign-exchange contracts traded at the CME Group Inc., the world's largest futures market, surged in September to a record 835,000 per day, a 32 percent increase from a year earlier, to a notional value of $111 billion.

'Volume Exploded'

"As volatility started to rise, the increase in business was a result of clients trying to proactively position themselves," Deutsche Bank's LaScala said. "When the whole de- leveraging started, foreign exchange volume exploded as people were trying to take their risk down."

U.S. commercial banks reported $2.1 billion in foreign- exchange trading revenue in the second quarter, a 66 percent increase from the same period a year earlier, according to the latest data from the Treasury's Office of the Comptroller of the Currency. Currencies revenue gained 14 percent in the first quarter.

Foreign-exchange trading was about the only bright spot on Wall Street this year.

While Treasuries have returned 14.7 percent, according to Merrill Lynch & Co.'s Treasury Master Index, average daily trading this year among the 17 primary dealers of U.S. government securities is $570.7 billion, compared with $571.6 billion in 2007, data compiled by the Federal Reserve show.

Takeovers, Issuance

Investment banking fees fell as takeovers shrank 36 percent from 2007. Fees for advising on mergers and acquisitions dropped 34 percent to an estimated $63 billion, according to data compiled by Bloomberg and New York-based research firm Freeman & Co. U.S. companies sold $859.4 billion of bonds this year, down 26 percent from 2007, according to data compiled by Bloomberg.

The meltdown of the U.S. mortgage market that led to a freeze in global credit forced traders to abandon higher-risk assets and pay back loans taken out in yen, causing the currency to soar to a 13-year high against the dollar as investors pared so-called carry trades. The U.S. dollar gained against other major currencies through November as investors sought a haven from global turmoil.

The exodus into the dollar and yen established a trend for traders to follow, according to Kathy Lien, director of currency research at GFT. The Ada, Michigan-based online-currency trading firm's volume surged 37 percent this year, including a jump of 157 percent in September and 187 percent in October, she said.

Dollar Index

ICE's Dollar Index, which tracks the dollar versus a basket of currencies comprised of the euro, yen, British pound, Canadian dollar, Swedish krona and Swiss franc, increased 15 percent this year to a peak of 88.46 on Nov. 21. Since then the index fell 8.3 percent to 80.902. The yen has appreciated 24 percent this year versus the U.S. dollar to 90 yen.

The billions of dollars made available by the Fed to other central banks and intervention to support local currencies by South Korea and other developing nations helped bolster trading, according to Neil Jones, head of European hedge-fund sales in London at Mizuho Capital Markets. Central banks intervene when they buy or sell currencies to influence exchange rates.

The Fed set up currency swap lines with more than a dozen other central banks. Arrangements with Europe, the U.K. and Japan, are open-ended, allowing the Fed's counterparts to draw as many dollars as they need. The value of the Fed's System Open Market Account rose to $304.5 billion, from $87.8 billion at the end of June, due to the increased dollar funding provided to central banks through the swap lines.

Central Bank 'Animals'

"The biggest animals involved in foreign exchange are the central banks," said Jones. "The combination of clear trends in the market and ample liquidity has helped foreign exchange do well this year."

Foreign-exchange funds had their biggest monthly returns in October since 2003, according to funds tracked by Stamford, Connecticut-based Parker Global Strategies LLC. Currency funds gained 2.53 percent in October, according to the firm, whose Parker FX Index tracks 68 firms managing more than $36 billion.

"People in foreign exchange are still getting recruited," said Jeanne Branthover, head of the global financial-services practice at recruiting firm Boyden Global Executive Search in New York. "Firms are saying to recruiters like us that they are always looking for the best talent in foreign exchange because it is an area that will still be revenue generating in 2009."

To contact the reporter on this story: Liz Capo McCormick in New York at Emccormick7@bloomberg.net

Last Updated: December 22, 2008 13:08 EST

Sunday, December 21, 2008

Lee Iacocca fed up

Lee Iacocca writes:

Am I the only guy in this country who's fed up with what's happening? Where the hell is our outrage? We should be screaming bloody murder. We've got a gang of clueless bozos steering our ship of state right over a cliff, we've got corporate gangsters stealing us blind, and we can't even clean up after a hurricane much less build a hybrid car. But instead of getting mad, everyone sits around and nods their heads when the politicians say, "Stay the course."

Stay the course? You've got to be kidding. This is America, not the damned Titanic. I'll give you a sound bite: Throw the bums out!

You might think I'm getting senile, that I've gone off my rocker, and maybe I have. But someone has to speak up. I hardly recognize this country anymore.

The most famous business leaders are not the innovators but the guys in handcuffs. While we're fiddling in Iraq , the Middle East is burning and nobody seems to know what to do. And the press is waving 'pom-poms' instead of asking hard questions. That's not the promise of the ' America ' my parents and yours traveled across the ocean for. I've had enough. How about you?

I'll go a step further. You can't call yourself a patriot if you're not outraged. This is a fight I'm ready and willing to have.

The Biggest 'C' is Crisis !

Leaders are made, not born. Leadership is forged in times of crisis. It's easy to sit there with your feet up on the desk and talk theory. Or send someone else's kids off to war when you've never seen a battlefield yourself.  It's another thing to lead when your world comes tumbling down. George Bush, Dick Chaney and who is this Bozo coming up next?  One of the most Liberal Idiots in the U.S. Senate, and he is talking about disarming America . I can't believe the

American people aren't seeing what he is about to do to this country. May God have mercy on us all.

On September 11, 2001, we needed a strong leader more than any other time in our history. We needed a steady hand to guide us out of the ashes. A Hell of a Mess. So here's where we stand. We're immersed in a bloody war with no plan for winning and no plan for leaving. We're running the biggest deficit in the history of the country. We're losing the manufacturing edge to Asia , while our once-great Companies are all moving offshore. We're getting slaughtered by health care costs. Gas prices are skyrocketing, and nobody in power has a coherent energy policy.  Our schools are the worst in the world. Our borders are like sieves. The middle class is being squeezed every which way. These are times that cry  out for leadership and we are getting ready to put the most Liberal Senator in the U.S. Senate in as our next President because we want to be fair and elect someone just because of his race. We don't have time to be fair, we need a strong leader.

But when you look around, you've got to ask: 'Where have all the leaders gone?' Where are the curious, creative communicators? Where are the people of character, courage, conviction, omnipotence, and common sense? I may be a sucker for alliteration, but I hope you get the point.

Name me a leader who has a better idea for homeland security than making us take off our shoes in airports and throw away our shampoo? We've spent billions of dollars building a huge new bureaucracy, and all we know how to do is react to things that have already happened.

Name me one leader who emerged from the crisis of Hurricane Katrina. Congress has yet to spend a single day evaluating the response to the hurricane, or demanding accountability for the decisions that were made in the crucial hours after the storm. Everyone's hunkering down, fingers crossed, hoping it doesn't happen again. Well guess what people?  We are having more floods right now.  What are we doing to help these people out?  Now, that's just crazy. Storms happen. Deal with it. Make a plan. Figure out what you're going to do the next time.  Why are we allowing people to build in flood plains anyway?  If you build in a flood area, expect to be flooded and deal with it. Don't expect the Government to bail you out.

Name me an industry leader who is thinking creatively about how we can restore our competitive edge in manufacturing. All they seem to be thinking now-days is getting themselves bigger salaries and bonuses. Who would have believed that there could ever be a time when 'The Big Three' referred to Japanese car companies? How did this happen, and more important, what are we going to do about it? Likely nothing!

Name me a government leader who can articulate a plan for paying down the debt, or solving the energy crisis, or managing the health care problem. The silence is deafening. But these are the crises that are eating away at our country and milking the middle class dry. I have news for the gang in Congress and the Senate. We didn't elect you to sit on your asses and do nothing and remain silent while our democracy is being hijacked and our greatness is being replaced with mediocrity. What is everybody so afraid of? That some bonehead on  Fox News will call them a name? Give me a break.  Why don't you guys show some spine for a change?  I honestly don't think any of you have one!

Had Enough?

Hey, I'm not trying to be the voice of gloom and doom here. I'm trying to light a fire. I'm speaking out because I have hope; I believe in America … In my lifetime I've had the privilege of living through some of America's greatest moments I've also experienced some of our worst crises: the 'Great Depression', 'World War II', the 'Korean War', the 'Kennedy Assassination',  the 'Vietnam War', the 1970s oil crisis, and the struggles of recent years culminating with 9/11. If I've learned one thing, it's this:

'You don't get anywhere by standing on the sidelines waiting for somebody else to take action. Whether it's building a better car or building a better future for our children, we all have a role to play. That's the challenge I'm raising in this book. It's a call to 'Action' for people who, like me, believe in America . It's not too late, but it's getting pretty close. So let's  shake
off the crap and go to work. Let's tell 'em all we've had 'enough.'

FBI Agents Shifted From Terror Work to Madoff, Subprime Probes

Dec. 21 (Bloomberg) -- The FBI has been forced to shift agents from terror and other crime work to Wall Street investigations including the Bernard Madoff Ponzi scandal, said David Cardona, head of the New York office's criminal division. http://www.bloomberg.com/apps/news?pid=20601087&sid=aLRvQBfKvPeM&refer=home


U.S. Economy : The Philosopher's Stone

SEC Report: Employees Browsed Porn, Ran Private Businesses

by Jake Bernstein, ProPublica - December 19, 2008 5:01 pm EST
Tags: Pornography, SEC


The Securities and Exchange Commission is taking a drubbing these days for its abject failure―despite detailed tips―to catch Bernie Madoff in what appears to be the biggest Ponzi scheme in our nation's history.

Now, thanks to little-noticed report from the agency's inspector general, we have a detailed glimpse into other bad behavior by some SEC employees.

The report, released the day after Thanksgiving, reveals that some employees at the agency were clearly preoccupied with matters other than their mission of "protecting investors and maintaining fair, orderly, and efficient markets." The semi-annual report to Congress, which covers the period from this past April to September, details among other things a handful of employees circumventing internal controls to download porn. Let's pause for some detail:

[Investigators] uncovered evidence that an employee who was still in his probationary period had used his SEC laptop computer to attempt to access Internet websites classified as containing pornography, resulting in hundreds of access denials. The OIG investigation also disclosed that this employee successfully bypassed the Commission's Internet filter by using a flash drive.

Presumably, that's not the kind of initiative the SEC is looking for.

There were also more serious misdeeds raised by the report. For example, there is the case of the senior-level commission employee who "clearly and purposefully identified herself as a Commission employee when dealing with brokers about a family member's account," making the broker in question feel like she was trying to "intimidate and bully him." The OIG referred the matter to management for "disciplinary action, up to and including dismissal." By the end of the period covered in the report, management "had not proposed or taken action."

There are other examples where the punishment was less than fulsome.

Investigators found employees in separate offices operated private photography businesses out of the commission:

An employee repeatedly and flagrantly used Commission resources, including Commission Internet access, e-mail, telephone and printer, in support of his private photography business for several years.

The IG's office recommended "disciplinary action up to and including dismissal." In turn, the report notes, "management suspended the employee from duty and pay for nine calendar days."

When asked about the report, Deputy Director for Public Affairs John Heine said, "In each of these [cases] there is some sort of response from the Commission. We don't have anything to say beyond that."

The report reveals also that two commission staffers employed as attorneys didn't have active bar memberships. One attorney let his bar license lapse in 1994. The report said one of the lapsed lawyers "submitted a declaration in Federal court, in which he stated that he was an attorney employed by the SEC. We referred the potential false statement or perjury to the applicable United States Attorney's office." (The office declined to prosecute.)

The IG also found that the commission did not have a sufficient system in place to "prevent and detect insider trading on the part of Commission employees or violations of the Commission's rules."

The agency's information management also comes in for criticism. An employee survey conducted by the inspector general revealed that employees failed to enter data into a computer system used to manage investigations.  The system known as the HUB was launched in August 2007 after the Government Accountability Office had highlighted major problems with the SEC's previous case management and tracking system. The IG semi-annual report also reveals that the commission lacks "an inventory of its laptops and was unable to trace ownership of laptops to specific individuals."

Here at ProPublica we've just begun working our way through the fascinating 95-page document.  Take a look at it yourself and let us know what you find.

Friday, December 19, 2008

Saxo Bank 10 economic outrageous claims



SAXOBANK.COM. THE SPECIALIST IN TRADING & INVESTMENT. SAXO BANK A/S | Philip Heymans Allé 15 | DK-2900 Hellerup Telephone +45 39 77 40 00 | Telefax +45 39 77 42 00 | www.saxobank.com | Team-corporatecommunications@saxobank.com December 17, 2008

Saxo Bank predicts 2009 will hit all economic lows

London and Copenhagen – 17 December 2008: Crude trading at $25. S&P 500 falls 50% to 500. China's GDP growth falls to zero. EURUSD falls to 0.95. Italy could leave the ERM. If Saxo Bank's 10 outrageous claims for the year ahead transpire, economic conditions will worsen dramatically in 2009. "The good thing is, overall, we predict 2009 will be a turning point because it can't get much worse" says Chief Economist David Karsbøl.

The Copenhagen‐based online trading and investment specialist's predictions are an annual attempt to predict rare but high impact 'black swan' events that are beyond the realm of normal market expectations. Compiled as part of the bank's 2009 Outlook, the thought exercise this year present a dismal view of the global financial landscape.

Saxo Bank's Outrageous Claims for 2009:

  1. There will be severe social unrest in Iran as lower oil prices mean that the government will not be able to uphold the supply of basic necessities.
  2. Crude will trade at $25 as demand slows due to the worst global economic contraction since the great Depression.
  3. S&P will hit 500 in 2009 because of falling earnings, vaporizing housing equity and increased cost of funds in the corporate sector.
  4. The EU is likely to crack down on excessive government budget deficits in several member states, and Italy could live up to previous threats and leave the ERM completely.
  5. The AUDJPY will drop to 40. The decline in the commodities markets will affect the Australian economy.
  6. EURUSD will fall to 0.95 and then go to 1.30 as European bank balances are under tremendous pressure because of exposure to the faltering Eastern European markets and intra‐European economic tensions.
  7. Chinese GDP growth drops to zero. The export driven sectors in the Chinese economy will be hurt significantly by the free‐fall economic activity in the Global Trade and especially of the US.
  8. Pre‐In's First Out. Several of the Eastern European currencies currently pegged or semi‐pegged to the EUR will be under increasing pressure due to capital outflows in 2009.
  9. Reuters/ Jefferies CRB Index to drop to 30% to 150. The Commodity bubble is bursting, with speculative excesses so large they have skewed the demand and supply statistics.
  10. 2009 will see the first Asian currencies to be pegged to CNY. Asian economies will increasingly look towards China to find new trade partners and scale down their hitherto US‐centric agenda.

Peter Schiff nailed it! and other info

http://www.youtube.com/watch?v=2I0QN-FYkpw Peter Schiff nailed it!

Updates from auto-trading community

High performance, including native InfiniBand support

  • New native InfiniBand implementation accesses InfiniBand at the "native verb" layer for improved latency, throughput, and scalability.
  • Very low latency of 5 microseconds on native InfiniBand or 41 microseconds on Ethernet can be achieved for 45-byte messages at a throughput rate of 10,000 messages per second.1
  • Very high throughput, one-to-many multicast messaging can deliver more than 40 million 12-byte messages per second on native InfiniBand, approximately one million 120-byte messages per second on Ethernet, and close to three million 120-byte messages per second on InfiniBand, all on common x86 servers 1.


SEC Charges Bernard L. Madoff for Multi-Billion Dollar Ponzi Scheme


Washington, D.C., Dec. 11, 2008 — The Securities and Exchange Commission today charged Bernard L. Madoff and his investment firm, Bernard L. Madoff Investment Securities LLC, with securities fraud for a multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm. The SEC is seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm.

The SEC's complaint, filed in federal court in Manhattan, alleges that Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was "finished," that he had "absolutely nothing," that "it's all just one big lie," and that it was "basically, a giant Ponzi scheme." The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.



Tuesday, December 16, 2008

Fed cuts rates to ZERO

http://money.cnn.com/2008/12/16/markets/markets_newyork/index.htm NEW YORK (CNNMoney.com) -- Stocks surged Tuesday after the Federal Reserve cut a key short-term interest rate to the lowest level on record, and signaled it had more tools available to help the economy as the recession stretches on.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aafQgexzAGXk&refer=home Dec. 16 (Bloomberg) -- The Federal Reserve cut the main U.S. interest rate to as low as zero for the first time and shifted its focus to the amount and type of debt it buys, seeking to revive credit and end the longest slump in a quarter- century.

Release Date: December 16, 2008

For immediate release

The Federal Open Market Committee decided today to establish a target range for the federal funds rate of 0 to 1/4 percent. 

Since the Committee's last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment, and industrial production have declined.  Financial markets remain quite strained and credit conditions tight.  Overall, the outlook for economic activity has weakened further.

Meanwhile, inflationary pressures have diminished appreciably.  In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate further in coming quarters.

The Federal Reserve will employ all available tools to promote the resumption of sustainable economic growth and to preserve price stability.  In particular, the Committee anticipates that weak economic conditions are likely to warrant exceptionally low levels of the federal funds rate for some time. 

The focus of the Committee's policy going forward will be to support the functioning of financial markets and stimulate the economy through open market operations and other measures that sustain the size of the Federal Reserve's balance sheet at a high level.  As previously announced, over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant.  The Committee is also evaluating the potential benefits of purchasing longer-term Treasury securities.  Early next year, the Federal Reserve will also implement the Term Asset-Backed Securities Loan Facility to facilitate the extension of credit to households and small businesses.  The Federal Reserve will continue to consider ways of using its balance sheet to further support credit markets and economic activity.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Christine M. Cumming; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.

In a related action, the Board of Governors unanimously approved a 75-basis-point decrease in the discount rate to 1/2 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of New York, Cleveland, Richmond, Atlanta, Minneapolis, and San Francisco.  The Board also established interest rates on required and excess reserve balances of 1/4 percent. 

http://www.nytimes.com/2008/12/17/business/economy/17fed.html?bl&ex=1229576400&en=9d5b8715e8bcd55a&ei=5087%0A WASHINGTON — The Federal Reserve entered a new era on Tuesday, setting its benchmark interest rate so low that it will have to reach for new and untested tools in fighting both the recession and downward pressure on consumer prices.

4 cast says:

Tue Dec 16 19:40:00 2008(EST)

* 17 Dec 08: 00:40(SGA) - FX NOW! EUR/GBP, GBP/USD Flows - Cable sales, but, its getting a more dangerous game.

Some cable sales being seen, with a German name noticeable, though at this stage they appear to be somewhat tentative. Although sterling cannot be described as anything but 'weak' in terms of most of the crosses, short covering on cable has - and can continue to have - rather painful consequences, and as such we would at this stage be a little hesitant ourselves in jumping on the sales bandwagon. On EUR/GBP, where, so far, the easy call has been north, though we will inevitably hear growing suggestions that parity is coming, especially in the media, we would also be inclined to step back a little, and would note our technician's call that though the 0.91 level is calling, it's a cut and run on a downside break of 0.8875. C.F.

* 17 Dec 08: 00:21(SGA) - FX NOW! EUR/USD, USD/CHF Flows - Wither the dollar?

Again thin and gappy markets, but with just a little (unsurprising) profit-taking after the initial squeeze appears to have run its course. With order books almost certainly cleared, and stops stopped, we now await the next push. The technicians will, of course be concentrating on buying on dips, and the tacticians, who yesterday were calling for the USD to be the weakest currency at least for the first half of 2009 will be re-evaluating, and perhaps thinking that a lot of weakening has already been done! But in the meantime, we look for a relatively solid base near 1.40 (though tech studies allow for a pullback to 1.3940), and a push to 1.4185, a 50% retracement level, which, if nothing else, is at least a convenient peg to hang the next EUR/USD rally on. C.F.

Monday, December 15, 2008

Russia devalues ruble as Madoff fraud unraveled

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aw7gy7CnbU_s Dec. 15 (Bloomberg) -- Russia's central bank devalued the ruble for the second time in a week after policy makers spent $161 billion of reserves trying to defend the currency and oil revenue slumped.

Just when Wall Street needs it least, Bernie Madoff's pyramid scheme takes financial fraud to new lows.... http://www.economist.com/finance/displayStory.cfm?story_id=12795543&source=features_box1

Tim Duy is worried that "the Fed the Fed and Treasury are setting the stage for a disorderly adjustment of the Dollar":

What If the Analogy is Wrong?, by Tim Duy: I say this with no exaggeration: The picture painted by the data flow of the past two weeks is deep into the left tail of any of my reasonable distribution of probable economic outcomes. The die is now cast – fiscal stimulus will be too late to prevent the snowballing that will occur throughout the first half of next year. In this environment, policymaking will become increasingly desperate.    http://www.rgemonitor.com/financemarkets-monitor/254768/fed_watch_what_if_the_analogy_is_wrong


Sunday, December 14, 2008

Madoff crisis collapses Europe’s 2nd largest bank

Dec. 15 (Bloomberg) -- Banco Santander SA, Europe's second- biggest bank by market value, may drop after saying its hedge fund unit invested 2.33 billion euros ($3.1 billion) of client funds with Bernard Madoff, who allegedly ran a Ponzi scheme that cost investors $50 billion.


The Sunday Telegraph also reported, citing experts, that British pension funds and insurance companies invested in Madoff's company.    http://www.google.com/hostednews/afp/article/ALeqM5iOlOKnrglqUS5JeRuOwbTOZtgP0Q

http://www.businessweek.com/investing/insights/blog/archives/2008/12/ponzi_nation.html?campaign_id=rss_daily Wall Street trader Bernard Madoff allegedly defrauds the rich and famous out of tens of billions of dollars. Minnesota businessman Tom Petters allegedly fleeces hedge funds out of $3.5 billion. And socialite New York lawyer Marc Dreier may have duped some hedge funds into giving him hundreds of millions of dollars for an apparently bogus real estate scheme.

[8:27:45 PM] eesolid says: Two major European-based banks said they have exposure worth billions of dollars to a US broker accused of a $50bn (£33bn) Wall Street fraud scheme.    http://news.bbc.co.uk/1/hi/business/7782731.stm

Italy's stock market watchdog, the Consob, has launched an investigation into the impact of the scandal on the national financial system, Ansa news agency reported.

The Bank of Spain also opened an investigation to determine the level of involvement of Spanish companies, the Spanish daily El Mundo said.

The Madoff scandal could have a bigger impact in Spain than the collapse of US bank Lehman Brothers this year, in which Spanish investors had exposure of between 1.3 and 2.6 billion euros.


a monumental blow to investors' trust in Wall Street, their financial advisers and even themselves, experts say.

Charles W. "Chuck" Ranson Jr., managing director of investor learning group Tiger 21's Florida region, calls last week's developments a "game changer" for investors.

"This is not Merrill Lynch, this is not Goldman Sachs," Ranson said. "This is an individual guy, but an individual who had the most amazing credibility: a senior officer of the board of directors of NASDAQ, an honored colleague by the securities associations over the years. This is truly a situation that you want to disbelieve. But it's true, evidently."


Friday, December 12, 2008

Bernake's Billions

US Banks ‘totally bankrupt’

NEW YORK (Reuters) - Jim Rogers, one of the world's most prominent international investors, on Thursday called most of the largest U.S. banks "totally bankrupt," and said government efforts to fix the sector are wrongheaded. http://www.reuters.com/article/newsOne/idUSTRE4BA5CO20081211

http://www.bloomberg.com/apps/news?pid=20601087&sid=avVnU01XRJWE&refer=home Dec. 12 (Bloomberg) -- Ecuadorean President Rafael Correa halted payment on foreign bonds he calls "illegal" and "illegitimate," putting the South American country in default for a second time in a decade.

Dec. 12 (Bloomberg) -- Arience Capital Management LP, a New York-based hedge-fund firm run by Caryn Seidman-Becker, is closing its sole fund because markets are "incompatible" with its investment style.

Arience, which manages more than $1 billion, plans to shut down by Dec. 31 and return about 95 percent of investors' money by the end of January, according to a letter sent to investors yesterday. The remaining assets will be paid after the firm's 2008 audit has been completed.

"We do not currently see a clear path to employ our disciplined process and gain the necessary conviction to become reinvested," Seidman-Becker said in a letter, a copy of which was obtained by Bloomberg News. "This decision stems from our belief that the current market environment is incompatible with our investment style and process."


Many traders were mad, some passionately and personally upset. One trader at a large investment management firm was quite vocal about his complete shock and anger towards Madoff and the situation.

"I've begun to lose faith in this business and I no longer know who to trust or who the people I trust really are," he says. "What has happened to this industry's integrity? How did we get to this place and how the hell are we going to get back to where we belong?"


http://www.ooyala.com/player.js?width=480&height=360&embedCode=RycWE2OitY0LKHsmCZjA3Ay7SlhgxPUe "Bernake's Billions"

Bernard Madoff arrested over alleged $50 billion fraud

NEW YORK (Reuters) – Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion "Ponzi scheme" in what may rank among the biggest fraud cases ever.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

On Thursday, two agents for the U.S. Federal Bureau of Investigation entered Madoff's New York apartment.

"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.

The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.

U.S. prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.

The Securities and Exchange Commission filed separate civil charges against Madoff.

"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."

Dan Horwitz, Madoff's lawyer, told reporters outside a downtown Manhattan courtroom where he was charged, "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."

A shaken Madoff stared at the ground as reporters peppered him with questions. He was released after posting a $10 million bond secured by his Manhattan apartment.

Authorities, citing a document filed by Madoff with the U.S. Securities and Exchange Commission on January 7, 2008, said Madoff's investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management. Those clients may have included other funds that in turn had many investors.

The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.


An investor in the hedge fund said it generated consistent returns, which was part of the attraction. Since 2004, annual returns averaged around 8 percent and ranged from 7.3 percent to 9 percent, but last decade returns were typically in the low-double digits, the investor said.

The fund told investors it followed a "split strike conversion" strategy, which entailed owning stock and buying and selling options to limit downside risk, said the investor, who requested anonymity.

Jon Najarian, an acquaintance of Madoff who has traded options for decades, said "Many of us questioned how that strategy could generate those kinds of returns so consistently."

Najarian, co-founder of optionmonster.com, once tried to buy what was then the Cincinnati Stock Exchange when Madoff was a major seatholder on the exchange. Najarian met with Madoff, who rejected his bid.

"He always seemed to be a straight shooter. I was shocked by this news," Najarian said.


Madoff had long kept the financial statements for his hedge fund business under "lock and key," according to prosecutors, and was "cryptic" about the firm. The hedge fund business was located on a separate floor from the market-making business.

Madoff has been conducting a Ponzi scheme since at least 2005, the U.S. said. Around the first week of December, Madoff told a senior employee that hedge fund clients had requested about $7 billion of their money back, and that he was struggling to pay them.

Investors have been pulling money out of hedge funds, even those performing well, in an effort to reduce risk in their portfolios as the global economy weakens.

The fraud alleged here could further encourage investors to pull money from hedge funds.

"This is a major blow to confidence that is already shattered -- anyone on the fence will probably try to take their money out," said Doug Kass, president of hedge fund Seabreeze Partners Management. Kass noted that investors that put in requests to withdraw their money can subsequently decide to leave it in the fund if they wish.

Bernard L. Madoff Investment Securities has more than $700 million in capital, according to its website.

Madoff remains a member of Nasdaq OMX Group Inc's nominating committee, and his firm is a market maker for about 350 Nasdaq stocks, including Apple, EBay and Dell, according to the website.

The website also states that Madoff himself has "a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."

The company's website may be found here: http://www.madoff.com/

(Additional reporting by Christian Plumb, Phil Wahba, Michelle Nichols and Jennifer Ablan in New York and Rachelle Younglai in Washington; Editing by Andre Grenon, Bernard Orr and Alex Richardson)

Tuesday, December 9, 2008

And now for a world government

I have never believed that there is a secret United Nations plot to take over the US. I have never seen black helicopters hovering in the sky above Montana. But, for the first time in my life, I think the formation of some sort of world government is plausible.

A "world government" would involve much more than co-operation between nations. It would be an entity with state-like characteristics, backed by a body of laws. The European Union has already set up a continental government for 27 countries, which could be a model. The EU has a supreme court, a currency, thousands of pages of law, a large civil service and the ability to deploy military force.

http://www.breitbart.com/article.php?id=081207225000.rnygzmld&show_article=1 Investor fear drives US Treasury yields to near zero


Tuesday, December 2, 2008

Market collapse a boon for FX quant systems, and suggests FX is an emerging asset class

Market collapse a boon for FX quant systems, and suggests FX is an emerging asset class

Fear and market declines have plagued the headlines, but a different story is emerging from automated black box traders in the FX markets.

"Ever since the collapse of Lehman Brothers, our phone has been ringing off the hook. I don't have enough time in the day to properly follow up all the new leads coming in," says Joe Gelet, President of Elite E Services FX Systems. He continues, "While retirement accounts are being wiped out, our systems are over-performing our expectations. Some client accounts were up over 250% in a single week of trading! (These systems are high-risk systems and should be treated as such) The volatility has been great for our systems, and clients are seeking an alternative to the traditional."

Frank Franze, President of Z Trade FX, says: "We're getting requests that simply didn't exist 3 months ago. Brokers are saying they opened more accounts in the last 6 weeks than they did in 2007. Everything is shifting around – some brokers who are plagued with liquidity issues are seeing clients flee to those who aren't. Z Trade FX is positioning itself to be a world-class Introducing Broker to multiple global firms, so clients are handed a choice."

Elite E Services has completed an Expert Advisor trading system after 8 months of research & development. The system has been named "Golden Grid" because it is a Grid trading system based on Fibonacci, a.k.a. Golden Ratio. The golden ratio appears in nature and in the markets; the Golden Grid system takes a simple approach to trading, and by implementing the Golden Ratio both in the positioning of the grid itself and in the money management, it enables a simple system to work on any market in any condition. Built into the system is an account protection risk module that can be set by the user, normally to 5%. This protects any account from a black swan event causing a large drawdown. Golden Grid is available on the Meta Trader 4 platform.

EES has also developed an entire range of systems for the Tradestation platform six of which are being released this week which can be traded as a multiple currency basket and make up a portfolio designed with a low-risk money management profile. When traded as a portfolio further protection again is offered with a maximum 10% risk. The first six crosses now available are EUR/USD, EUR/AUD, GBP/USD, EUR/CHF, NZD/USD, and AUD/USD. These systems can be traded individually or as a portfolio wherever Tradestation is available.

Z Trade FX is offering clients a $500 instant rebate to any customer who opens an account and deposits at least $50,000 USD by December 31st, 2008. See more detail at www.ztradefx.com

Elite E Services develops quantitative systems for the FX market as well as advising investors about FX at www.startelite.com



Monday, December 1, 2008

European Banking collapse imminent as US catastrophic ISM data looks less Armageddon like

Why should we care that these emergency economies are on the verge of collapse? Because …European Banks Loaned These Countries A Staggering $3.5 Trillion. When They Go Down, So Will Europe's Largest Banks!     http://www.marketoracle.co.uk/Article7550.html


Data signal deep global downturn...
Manufacturing hits 26-year low...
Schwarzenegger declares fiscal emergency in CA...
Bush: 'I'm sorry' crisis is occurring...
Oil plunges below $50...
Treasury Yields Plunge to Lowest on Record...
Bernanke: 'No comparison' to Great Depression...
Bank stocks suffer biggest one-day decline since crisis began...

The National Bureau of Economic Research today announced that its Business Cycle Dating Committee had officially determined a peak in economic activity at December 2007, which signals the start of the recession. I am a member of the committee. Though I speak only for myself, not the committee, I offer my views on two questions of possible interest:

(1) Who needs the NBER Business Cycle Dating Committee (BCDC) anyway?

(2) Why did we pick December 2007 as the starting month of the recession?    The National Bureau of Economic Research today announced that its Business Cycle Dating Committee had officially determined a peak in economic activity at December 2007, which signals the start of the recession. I am a member of the committee. Though I speak only for myself, not the committee, I offer my views on two questions of possible interest:

(1) Who needs the NBER Business Cycle Dating Committee (BCDC) anyway?

(2) Why did we pick December 2007 as the starting month of the recession?

Paul Krugman: Deficits and the Future

Deficit hawks who are complaining about the stimulus package have it all wrong:

Deficits and the Future, by Paul Krugman, Commentary, NY Times: Right now there's intense debate about how aggressive the United States government should be in its attempts to turn the economy around. Many economists, myself included, are calling for a very large fiscal expansion to keep the economy from going into free fall. Others, however, worry about the burden that large budget deficits will place on future generations.