Justice-Free Markets - If We Can Call Them 'Markets'

Despite my steady diet of *selective ignorance* of all things deemed news....I accidentally came across that article in my web surfing and it infuriated me.

So why is JP Morgan actually halting their *foreclosures*?

Well, for a variety of scumbag reasons.

First, it gives them cover to CONTINUE to not realize the crippling losses on their mortgage books.

And THAT, allows management to CONTINUE paying itself bull market wages.

It's also an act of political obeisance to Big Government - after all, JP Morgan is so completely bankrupt that they only exist because of direct access to Washington and to the printing press. So they have to occasionally submit to bend over for that other posse of Big Gov apparatchiks - lawyers.

There's also this econo-illiterate theory prevalent among bankers and Washington incumbents that by simply stalling/halting foreclosures....that this will keep the housing market from EVER falling back to reality. They genuinely believe this but in fairness, these Morons hold dear a vast number of other myths and legends.

But what really made my blood boil in that article was the mention that GMAC - a 200% taxpayer-owned entity - had already, yet again, come up with this same BS excuse to let people like my old landlord hold on to properties that there were already a couple of years delinquent on.

In fact, he's still collecting rent on that rat-infested house that I used to live in. The bills haven't been paid in 2.5 years!!! His first bankruptcy filing was over 6 months ago and he still hasn't been dispossessed of the 4 homes he *owns* and is milking.

Everybody in this picture is making out like the bandits they are.

Meanwhile, the rest of us are suffering from all sorts of crafty new banking and credit card fees, zero interest on our savings, and higher taxes at every level of government.

It doesn't take much foresight to see that these pols WILL NEVER, EVER reverse course - towards the isle of economic prudence.

Nope. They've set us on the path to a full-blown currency implosion.

Today I heard, for the first time in the nearly 15 years I've been following the stock market, I heard some Top-40 DJ mention how great the stock market is doing. He said, "Run home and open those end-of-quarter statements and you'll be smiling..."

Can you say, "shoe shiner stock tips"?

EVERYONE Should Quit Trading!

Obama Rips Banks, Proposes Ban On Proprietary Trading

President Obama stepped up the heat on big banks Thursday, saying he would fight to ensure that their "binge of irresponsibility" never happens again.

He proposed limits on banks' size and proprietary trading and said he would work to "rein in excessive abuse that brought down our system."

He said banks "backed by the American people" shouldn't be allowed to own or sponsor hedge funds and private equity funds for their own profit, while putting customers at risk.

About the new proposed rule that'd limit the proprietary trading of banks, the head of the New York Stock Exchange, Duncan Niederaurer said,

....implementation is challenging. As a student of the market I can tell you that it all blurs together...

But he's also a *Former Managing Director of Goldman Sachs*!!!

Supposedly, Goldman trades 20 times as many shares for their own account than they do for their customers.

I have no problem with Goldman gambling its own money; but they shouldn't be brokering trades as well. Doing both entails almost the biggest conflict of interest imaginable.

Look, I'm against most regulation of markets. The fund managers (and their investors) who willingly give their trades to Goldman and get ripped off....they deserve the bad fills and whatnot.

But within a regulated market, it's not hard at all to segregate trading and brokering. Any and all arguments against doing so are specious and fall flat.

I got sidetracked here.

Look, it's not *proprietary trading* that got all these banks in trouble.

It was the gambling implicit in no-money-down, high-priced mortgages in residential AND commercial real estate. And credit cards too!

So yes, FDIC-insured banks probably shouldn't be rolling the dice like Sol.

But selling 20 or 50-1 leveraged homes to José Sixpack has proven far riskier.

Getting back to Obama for a minute. He's right to be slamming the banks - even it he's clueless at the to extent of Big Government culpability in their behavior. They were born of leverage for crying out loud, with their fractional-reserve sanction, FDIC insurance, and whatnot.

You see while Obama inveighs against banker's "binge of irresponsibility"....

Not only will this anti-trading rhetoric do nothing to lower the risk profile of Bank of America, JP Morgan, Wells Fargo, Citigroup, et al,....we're still left with very little to combat the *binge of irresponsibility* from politicians. Consider the hypocritical irony of Barney Frank, serial apologist for Fannie, Freddie, and subprime lending, up there next to the podium. What a farce!

Capitol Thievery

It's well known among us few perspicacious minds that all of the banks are insolvent.

Their *earnings* reports are pure flights of fancy. They simply make up numbers that have no relation to economic reality - all condoned by an econo-illiterate, incumbent Big Goverment. Remember those empty-skulled pols *relaxed* mark-to-market accounting in 2009.

For quite some time now, the big banks have buried toxic loans in so-called off-balance sheet entities. But this crime is in the process of being reined in. These banks will soon be obligated to *consolidate* their books. Read how they are responding to that impending reality:

Citigroup, JPMorgan Urge Relief From Higher Capital Requirement

Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. asked U.S. regulators for a reprieve from meeting higher capital requirements taking effect next year, arguing that lending and the economic recovery would be harmed.

Banks should be given three years to raise capital for offsetting assets and liabilities that must be brought onto their balance sheets, Citigroup Chief Financial Officer John Gerspach said yesterday in a letter to regulators. Requiring banks to "assume the risk-based capital effects immediately, or even over one year, is an undeniably severe penalty," he wrote.

Regulators including the Federal Reserve and the Federal Deposit Insurance Corp. sought comments on whether to permit a "phase-in" of capital requirements rising under a change approved by the Financial Accounting Standards Board. The rule passed in May eliminates off-balance-sheet trusts known as Qualifying Special Purpose Entities, forcing banks to move billions of dollars of assets and liabilities onto their books.

The capital requirements "will have a significant and negative impact on the amount of consumer-conduit funding that will be made available by U.S. banks," said the letter from JPMorgan, the New York-based bank that this week reported its biggest quarterly profit since the subprime-mortgage market collapsed in 2007.

"We strongly support a phase-in period for the rule changes," according to JPMorgan’s letter, which was signed by Managing Director Adam Gilbert. The change would take effect for annual reports after Nov. 15.

‘Crowds Out’

The rule "could lead to the result that every $1 billion of additional capital held from newly consolidated assets ‘crowds out’ more than $15 billion in loans," Paul Ackerman, Wells Fargo’s treasurer, wrote in a letter yesterday to the Fed, FDIC, Office of the Comptroller of the Currency and Office of Thrift Supervision. The comment period ended yesterday.

"That sort of information will get the attention of politicians, if not the regulators," said Robert Willens, a former managing director at Lehman Brothers Holdings Inc., who now runs his own tax and accounting advisory firm in New York.

Citigroup, the New York-based bank that yesterday reported a third-quarter profit of $101 million, argued that bringing off-balance vehicles onto its books would lead the bank to cut financing for securitizations that fuel credit-card lending, residential mortgages and student loans. Additional consumer loans will be cut as well, Citigroup said.

"We do not plan to reduce lending in only those businesses specifically impacted by the incremental regulatory capital requirements," Gerspach wrote.

Citigroup spokesman Stephen Cohen and JPMorgan spokesman Brian Marchiony declined to comment beyond the content of the letters. Julia Tunis Bernard, a spokeswoman for San Francisco- based, also declined to comment.

Pooled Loans

Lenders recorded profits before the U.S. subprime mortgage market collapsed by selling pooled loans to off-balance-sheet trusts, which repackaged them into mortgage-backed securities. Banks sold those securities to other off-balance-sheet vehicles they sponsored, concealing from investors that the securities were backed by deteriorating home loans.

What's astounding about this, this news/reality, is that absolutely NO ONE really gets it.

THE BANKS ARE BANKRUPT. THEY'RE ADMITTING THAT IF THEY HAVE TO RECOGNIZE THEIR HIDDEN LOSSES....THEY'LL BE UNDERCAPITALIZED, i.e. BROKE!

They are going *urge relief from a higher capital requirement*???

That's just a dissembling way of saying they are levered out their wazoo.

So how levered are the largest banks of our fractional reserve, government-sponsored monopoly?

Well, it's right there in the article. Wells Fargo implicitly says that for every $1 billion loss they ADMIT, they will have to reduce loans by $15 billion.

In other words, these banks are LEVERED a whopping 15 to 1!

By that math, if a mere 7% or so of depositors try to take their cash out....Wells Fargo wouldn't have a nickel left for anyone else.

And note the disgusting politicking. Wells Fargo (management) is threatening legislators with *we'll cut our lending if you push enforcement of this new rule*.

This is complete bull$hit!

They absolutely can raise capital - a hundred billion if they want. They can float stock and/or zing bondholders with a haircut. They just don't want to.

Instead, they are going to continue to CAPITALIZE on the gullibility of Congress, the passivity of Moronic investors, and the pockets of disenfranchised taxpayers.

Welcome To Fantasy Land!

So, supposedly, JP Morgan Chase earned $12 billion in 2009.

Who in their right mind could possibly believe that?

Who could believe that ANY bank with home loans, car loans, commercial loans, credit card, commercial RE, etc. on their books was *making money*, no less such an enormous sum?

Now I'm wondering which is more of a joke - so-called GDP government propaganda OR Wall Street bank earnings!

I don't care if JPM has supposedly set aside $33 billion in total loan loss provisions....if they had to sell everything, OR mark-to-market all of their *assets*, they'd be completely insolvent.

So what's the stock price going to do?

Who knows? I'm betting lower and I feel outright compelled to do so.

Minimally, expect them to dilute equity holders within this year, yet again.

Remember, JP Morgan is really JP Morgan Chase WaMu.

That deadbeat landlord of mine has a JP Morgan notch in his belt.

One of his four soon-to-be-foreclosed properties has a $1.1 million lien on it that's now, courtesy of WaMu, on the books of JPM. See - Why WaMu Is Bankrupt.

But real estate has been strong here in Boston.

It's current market value, only two years from the loan origination, is probably around $550,000.

And JP Morgan, through a reduced auction price, is also going to be on the hook for the unpaid property taxes, any septic issues, and whatever damage the crumb does on his eventual way out.

How many of those type of *assets* is Dimon papering over when he glibly reports *...nearly $12 billion* in earnings for 2009?

One thing that's taken me aback this past week, is the deafening silence among analysts and bloggers about JPM's so-called earnings. Either I'm dead wrong, the bears have been extinguished,....or everyone has become content to play *pretend*.



Place your bets!

Personal Credit Crisis

Two days ago I was at the supermarket where my credit card *didn't work*. The cashier said I had a "contact issue".

Say what?

Then, later on my card didn't work at the gas station either.

So I pulled away from the pump and dialed Chase.

Apparently, my wife forgot to pay the bill due on June 25th. We happened to be away on vacation that week and the bill either didn't show or was lost. No big deal, right?

So I was already screaming at the customer service rep when she said it's always been their policy to *turn off* delinquent card holders.

That only made me more irate. I told her I'd had the card for 12 years and missed many a payment without them ever revoking my credit so she was full of sh*t.

CaptiousNut - It must be some new policy or something.

CustomerServiceStooge - No. It's not. It's been that way ever since I've been here.

CaptiousNut - How long have you been there?

CustomerServiceStooge - About a year.

CaptiousNut - Well I've had the card since 1997....It's never been *turned off* before. You need to turn my card back on right now or I'll never use it again.

Of course she couldn't. Like a knucklehead I demanded a *supervisor* who fed me some more BS - that they couldn't turn it on without a payment, that it had ALWAYS been their policy.

Fine I said. I got her name and told her not only would I never use the card again, that I'll use one of my other cards for everything henceforth....AND, for pure spite I may decide to not pay it at all and make them eat the 10 grand (2 months) balance.

Now there's no way I'd do that. As I said, I acted like a knucklehead but only because I was that PO'ed.

I have no problems paying the penalties and interest for a missed payment. But to turning the card off on a customer who's paid their bills for 12 years?

That's absolutely asinine!

My wife called up to yell at them as well. And get this, when complaining about them turning off our card without warning....they dropped this bombshell on Mrs. C-Nut:

"We have to.....the money we lend is UNSECURED."

No bleepin' crap it is. When the heck did the credit card industry finally realize that?!?!?!

So while today they are irrationally clamping down on creditworthy folk like myself....

Over the past several years, they let people like my Moronic landlord run up hundreds of thousands in debt on a dozen or so cards.

Just yesterday in the mail I could see a letter to him from one such company. Through the envelope it was easy to see his debt of just over $49,000.

So I've started using a dormant card in my wallet. Screw JP Morgan Chase, right?

But gosh darnit, the next card in my line-up is from Bank of America's MBNA....so that wanker Ken Lewis is going to make out on this.

Wall Street - It Really Is All Brawn, No Brains

Being a Masshole myself, and a little bit young, I don't remember Lenny Dykstra as a Met. But I witnessed him firsthand in Philly where he often put the entire team on his back in carrying them to the 1993 World Series. He was one baaaad dude; and did everything with a real *flair*:



Apparently he hasn't changed one bit. Today he's declaring bankruptcy in style as well:

Lenny Dykstra Files Bankruptcy

NEW YORK -- Lenny Dykstra, the former star center fielder for the New York Mets and Philadelphia Phillies, has filed for Chapter 11 bankruptcy protection.

The 46-year-old has no more than $50,000 of assets and between $10 million and $50 million of liabilities, according to a petition filed Tuesday with the U.S. Bankruptcy Court in the Central District of California.

Dykstra's filing comes in the wake of more than 20 lawsuits he faces tied to his activities as a financial entrepreneur, including The Players Club, a glossy magazine for athletes he had helped launch in 2008.

According to an April article on ESPN.com, Dykstra put his net worth at $60 million, and also owned a black Rolls Royce Phantom and Gulfstream II jet.

Walter Hackett, a lawyer for Dykstra, said the event triggering the bankruptcy filing was a planned foreclosure sale of a southern California residence that Dykstra bought from hockey legend Wayne Gretzky for $17.5 million in 2007.

According to the bankruptcy petition, Dykstra's largest unsecured creditors include units of JPMorgan Chase & Co., owed $12.9 million, and Bank of America Corp, owed a combined $4.2 million.

Hackett said Washington Mutual, now part of JPMorgan, was the main lender on the 2007 home purchase, and that the bank misled Dykstra about his ability to afford the property. The lawyer said the bank deserves nothing on its claim.

Hah! JP Morgan and Bank of America getting stiffed to the tune of millions at a clip?

Who'd a thunk it?

One just has to love the lawyer's defense - that *the bank misled Dykstra about his ability to afford the property*!!!

Now I had no idea that Lenny had re-fashioned himself into a *financial guru* and that Jim Cramer had gone long Dykstra. Pay attention to the funniest part - between the 13 and 30 second marks:



You thought you were watching a CollegeHumor or SNL parody there, right?

So did I.

Here's Cramer's money quote:

Now there are probably only four or five people in the world who if they sent me an email...told me to own(?) a stock....I would actually take them seriously....He's one of them.

What else is there to say?

Just keep shorting Cramer, Cramer pumps, and banks that lend to them!

[Looks like Forbes was onto this story last year.]

Last year, in Empiricism - The Only Science I discussed the fabulous book Moneyball which touched upon Lenny Dykstra. In that book Billy Beane admiringly contrasts himself - a can't-miss talent who flopped - with Lenny Dykstra who was an unorthodox, cocksure killer. If memory serves me, Beane was astounded learning one day that Lenny didn't even have a clue who the imposing (HOF-bound?) pitcher was for their upcoming game. Lenny was simply guts personified and a complete neanderthal.



Looks like a spot-on diagnosis for today as well - not that he's any different than the rest of the meatheads on Wall Street.

Remember Bear Stearns' Josh Weintraub?

Taxpayers Bailing Out The NBA

Yep, we are bailing out those billionaire owners of sports franchises:

The NBA is set to borrow $175 million Feb. 26, marking one of the first league financings since the implosion of the credit markets last fall.

The money, which will be available to 15 teams, supplements an existing $1.7 billion leaguewide credit facility that uses the NBA’s media contracts as collateral to secure loans for the clubs. The NBA surveyed its teams, and 15 responded they would like to tap into the new borrowing.

While the league said it is pleased to borrow in an extremely illiquid credit market, the deal came at a cost, with interest rates up to 8.27 percent, hammering home the notion that the era of cheap money in sports is over. The 15 teams can use the money for any purpose, but covering operating losses may be high on the list.

"In this economic environment, it’s tremendous that the league can place such a facility," said Alex Martins, chief operating officer of the Orlando Magic, which plans to borrow from the new debt. "It certainly helps us bridge the time period between now and when we move into our new events center in 2010. We’ve been operating at a $15 [million] to $20 million (annual) loss over the past half-dozen years, so it helps us."

Each of the 15 teams can borrow a maximum of $11.66 million from the debt proceeds.

The private-placement deal was arranged by JPMorgan Chase and Bank of America.

Haha. Haven't JPM and BAC gotten a couple hundred billion in taxpayer relief (and counting!)?

Note that picture above of an empty Atlanta Hawks home game was taken in March of 2007. It was taken during the good, *bubble* years!

Now you can go here and read empty-skull Bill Simmons' whining about how boring All-Star Weekend was for him in this economic climate.

Jim Cramer - An Unrepentant Moron

JPMorgan Chase : "This remains the most attractive bank stock in the book. This is the best bank in the world right now."

(link)



Since Cramer pounded the table for JP Morgan Chase on November 4th, JPM has declined a whopping 50%!!!

I may be a Moron for covering my short at $34.71 one week before it dropped sub-$20....

BUT I DIDN'T TELL ANYONE TO GET LONG.