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Monthly Archives: October 2012
U.S. Sues Wells Fargo: Yet Another Bailed-Out Bank Accused of Fraud | Matt Taibbi | Rolling Stone
Earlier this year, Charlie Munger, who is billionaire Warren Buffet’s right hand at Berkshire Hathaway and a sort of self-proclaimed mad oracle of Wall Street, made some interesting comments. He bashed people who buy gold, delivering an all-time amazing quote:
Gold is a great thing to sew onto your garments if you’re a Jewish family in Vienna in 1939 but civilized people don’t buy gold – they invest in productive businesses.
Munger, if you might remember, is the same gazillionaire dickhead who two years ago ripped people experiencing post-crash economic hard times, saying they should “suck it in and cope” and that anyone who wants to complain about the Wall Street bailouts should realize they were “absolutely required to save your civilization” (Munger thinks a lot about “civilization”). He added that even if you didn’t like them, “you shouldn’t be bitching about a little bailout. You should have been thinking it should have been bigger.”
Some of those bailouts we shouldn’t have complained about, of course, were directed at one of Munger’s favorite companies – banking giant Wells Fargo, in which Munger and Buffett are heavily invested. Wells Fargo got as much as $36 billion in federal aid after the crash and got a massive push from the government to help it buy up the dying crash-era megabank Wachovia for $12.7 billion, a shotgun wedding that created the second-biggest bank in America. Wells Fargo not only got $25 billion in TARP funds just before it bought Wachovia, it got a special tax break from then-Treasury Secretary Hank Paulson, which some reports say was worth as much as $25 billion to WF at that time.
This is all just background for the latest news: Wells Fargo is being sued by the State for vast fraud in the mortgage markets. The U.S. Attorney in the Southern District of New York, Preet Bharara, yesterday brought a case against WF seeking “hundreds of millions of dollars” in damages for what it says is a decade of fraudulent behavior, in which WF wrongfully certified more than 100,000 mortgages as being eligible for federal mortgage insurance. Basically, Wells Fargo screwed the FHA and HUD by mass-approving loans without regard for whether they were defective or not. From the L.A. Times:
When Wells Fargo discovered problems with the loans, it failed to notify HUD, which administers the FHA program, as required, the suit said. The action alleges more than 10 years of misconduct.
“The extremely poor quality of Wells Fargo’s loans was a function of management’s nearly singular focus on increasing the volume of FHA originations – and the bank’s profits – rather than on the quality of the loans being originated,” Bharara’s office said in a statement.
The action by the U.S. Attorney here in New York comes on the heels of another suit against Chase brought last week by Eric Schneiderman in Obama’s Mortgage Fraud Task Force. That action alleges similar mortgage-related scumbaggery by Bear Stearns, which Chase acquired in another government-brokered, market-concentrating shotgun wedding in early 2008.
So in just a week, we’ve seen two pretty big actions brought against the Coke and the Pepsi of the American commercial banking world. We’ll see how they pan out, but it’s interesting, if nothing else.
So just to recap Munger’s comments: gold is not an investment for civilized people, it’s for panicked Jews fleeing the Holocaust. Civilized people, according to Munger, instead invest in productive businesses like Wells Fargo, which according to this new suit spent a decade committing mass fraud and dumping tens of thousands of dicey loans onto the lap of the taxpayer. If we think about it in retrospect, Wells Fargo then got rewarded for years of bad behavior by receiving tens of billions more in bailout money, which it used to buy a dominating market share – artificially inflating its share price for the next generation, to the benefit of wrinkly old greedheads like Charlie Munger. And if you don’t like it, you should suck it in and cope.
I wonder what Munger thinks about his investment now. Is it still civilized?
U.S. Sues Wells Fargo: Yet Another Bailed-Out Bank Accused of Fraud | Matt Taibbi | Rolling Stone.
Keiser Report: Bust-a-Bankster (E351)
In this episode, Max Keiser and Stacy Herbert discuss whether it’s time to start loving bankers as former Mayor Ken Livingstone suggests and they also wonder if the flying naked short selling witch caught by religious police in Saudi Arabia is, in fact, Blythe Masters covering an oil trade. In the second half of the show, Max Keiser talks to Aston Walker – aka the Birmingham Looter – about whether he was ever offered a deferred prosecution agreement for his crime of looting during the 2011 riots and ask whether he would have been granted immunity had he offered the loot as an infinitely rehypothecated collateralized looted H&M clothes bonds.
Popping The “Black Friday” Myth | ZeroHedge & WSJ
And so another urban legend falls, this time of the retail “doorbuster” ploy known as “Black Friday“, whose only goal is to get as many gullible US shoppers into retail stores with promises of massive discounts and unbeatable bargains. As it turns out the promises are completely hollow, in based on an analysis by the WSJ, those highly touted Black Friday deals aren’t deals at all, and in fact the bulk of the “discounts” are smaller compared to comparable price cuts throughout the year. In fact, the only thing that is true about the day that launches Holiday shopping, is that it is a great demonstration of the herd effect in play, where people line up in droves just because other people line up in droves. In the meantime, everyone else has already managed to snag that much desired purchase long ago and at a lower price. Of course, if this key day that anchors the start of the profitable retail shopping season is relegated to the dustbin of urban legendry, then retailers’ already negligible margins will be cut even further, leading to severe adverse economic consequences for a country whose economy is 70% based on consumption, and which is already on the edge as said consumer is largely tapped out and whose credit cards have been maxed out long ago.
After crunching two to six years’ worth of pricing data for a number of typical holiday gifts, The Wall Street Journal has turned up the best times to go deal hunting — and they almost never involve standing in the freezing cold all night.
It turns out that gifts from Barbie dolls to watches to blenders are often priced below Black Friday levels at various times throughout the year, even during the holiday season, and their prices follow different trajectories as the remaining shopping days tick down.
Watches and jewelry, typical last-minute quarry for well-heeled shoppers, get more expensive as the season progresses, according to Decide Inc., the consumer-price research firm that gathered and analyzed the data for this article. Blenders, which might sit around for months if they aren’t bought in the holiday window, get much cheaper at the end.
Presenting this visually:
America’s Moral Degeneracy – PaulCraigRoberts.org
On May 31, 2010, the Israeli right-wing government sent armed military troops to illegally board in international waters Gaza aid ships of the Gaza Freedom Flotilla organized by the Free Gaza Movement and the Turkish Foundation for Human Rights and Freedoms and Humanitarian Relief. The Israelis murdered 8 Turkish citizens and one US citizen in cold blood. Many others were wounded by the forces of “the only democracy in the Middle East.”
Continued:
What's happening? 