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Friday, May 22, 2015

Rigging of Forex Makes Felons of Top Banks

4 large global banks Citi, JPMorgan, Barclays & Royal Bank Scotland.

For the world’s biggest banks, what seemed like the perfect business turned out to be the perfect breeding ground for crime.
The trading of foreign currencies promised substantial revenues and relatively low risk. It was the kind of activity that banks were supposed to expand after the 2008 financial crisis.
But like so many other seemingly good ideas on Wall Street, the foreign exchange business was vulnerable to manipulation, so much so that traders created online chat rooms called “the cartel” and “the mafia.”
No one government agency is responsible for policing the currency market, leaving it up to committees, some run by the banks themselves, to set guidelines. And even when federal authorities adopted rules to rein in Wall Street a few years ago, they exempted certain foreign exchange transactions, a little-noticed concession to banks.

Now, the regulatory void has spawned another round of criminal accusations and multibillion-dollar penalties — enough to wipe out nearly all the revenue that major investment banks generated from their foreign exchange businesses last year.

On Wednesday, four large global banks — Citigroup, JPMorgan Chase, Barclays and Royal Bank of Scotland — pleaded guilty to a series of federal crimes over a scheme to manipulate the value of the world’s currencies. The Justice Department accused the banks of collusion in one of the largest and yet least regulated markets, noting that at one bank one trader remarked “the less competition the better.”
That lack of oversight, coupled with the pressure to squeeze profits from a relatively middling business, set the stage for this scandal, one that unfolded nearly every day for five years. The crimes described on Wednesday also painted the portrait of something more systemic: a Wall Street culture that enabled many big banks to break the law even after years of regulatory black marks after the crisis.
“If you aint cheating, you aint trying,” one trader at Barclays wrote in an online chat room where prosecutors say the price-fixing scheme was hatched.
In announcing the cases, the Justice Department emphasized that the banks’ parent companies entered the guilty pleas rather than a subsidiary, representing a new frontier in efforts to punish Wall Street misdeeds. At a news conference, Loretta E. Lynch showed that she had taken on the mantle as top Wall Street cop, less than a month after she was confirmed to replace Eric H. Holder Jr. as attorney general.
“Today’s historic resolutions are the latest in our ongoing efforts to investigate and prosecute financial crimes,” Ms. Lynch said on Wednesday.
For the banks, though, life as a felon is likely to carry more symbolic shame than practical problems. Although they could be barred by American regulators from certain activities, the banks scrambled behind the scenes to persuade those regulators to grant exemptions. That process, which delayed the Justice Department’s announcement by a week, already led to the Securities and Exchange Commission providing a number of waivers that allow the banks to conduct business as usual.
And at least for now, the Justice Department did not indict any employees whose errant instant messages underpin the cases against the banks. The banks long ago dismissed most of the employees suspected of wrongdoing, though New York State’s financial regulator, Benjamin M. Lawsky, forced Barclays to dismiss eight additional employees.

A fifth bank, UBS, was also accused of foreign currency manipulation. Although it was not criminally charged for that misconduct, the accusations cost the bank an earlier nonprosecution agreement related to the manipulation of another financial benchmark, the London Interbank Offered Rate, or Libor, which underpins the cost of trillions of dollars in credit cards and other loans. The Justice Department voided that nonprosecution agreement, prompting UBS to plead guilty to Libor manipulation, a rare stand against corporate recidivism.
In private negotiations, lawyers for UBS argued that the punishment was “unfair,” and had the bank’s chief executive make an in-person entreaty to prosecutors. But even after appealing to the deputy attorney general, their request was denied, a person briefed on the negotiations said.
“UBS has a ‘rap sheet’ that cannot be ignored,” said Leslie Caldwell, head of the Justice Department’s criminal division.
The five banks — which also struck civil settlements with the Federal Reserve, the Commodity Futures Trading Commission, a British regulator and Mr. Lawsky — agreed to pay about $5.6 billion in penalties. That sum comes in addition to the $4.25 billion that some of these banks agreed pay in November to many regulators.

“There is very little that is more damaging to the public’s faith in the integrity of our markets than a cabal of international banks working together to manipulate a widely used benchmark in furtherance of their own narrow interests,” said Aitan Goelman, the trading commission’s head of enforcement.
The foreign exchange business may have been particularly susceptible to manipulation, analysts say, because it can be less profitable than other forms of trading. That dynamic may have increased the incentives for the traders to break the rules.
And unlike the stock market, where regulators can monitor every trade, federal regulators lack a formal mandate to watch the currency market. In fact, in the aftermath of the financial crisis, Congress opened the door to regulating the market, but the Treasury Department exempted portions of it from certain new rules.

That regulatory gap has started to narrow. Banking regulators, which have the authority to root out unsafe practices, are increasingly scrutinizing currency trading desks in light of the scandal.
“It has come under even higher levels of scrutiny than certain other fixed businesses went through after 2008 financial crisis,” said George Kuznetsov, head of research and analytics at Coalition, a financial analytics provider.
Facing that scrutiny, the trading desks have lost some of their swagger. Some senior traders now spend less time trading and more time retraining their teams and meeting with clients to reassure them that their business practices are sound, people close to the business say. Many banks have reined in chat rooms, which were at the heart of the fixing scheme but were also a home for trading desk banter and camaraderie. And even those not implicated in the scheme bowed out in the last year, with Citigroup and Goldman Sachs traders leaving for hedge funds.

The recent turmoil surrounding the foreign exchange business reflects broader struggles over the role of Wall Street’s trading operations.
Regulatory headaches and unpredictable trading results in currencies, commodities and interest rates have prompted many banks to evaluate whether some of these businesses are more trouble than they are worth.
“The behavior that resulted in the settlements was an embarrassment to our firm,” Citigroup’s chief executive, Michael L. Corbat, said in a memo to employees on Wednesday. As part of its plea deal, Citigroup will pay a record $925 million antitrust penalty, the largest single fine ever imposed for a violation of the Sherman Act.
Foreign exchange revenue totaled $11.6 billion at 10 of the world’s largest banks last year, according to Coalition analysis. That revenue had declined nearly every year since 2008, when it reached an estimated $21.7 billion.

The decline came as central banks around the globe worked to keep interest rates low, and the value of some world currencies remained relatively steady. Investors tend to place fewer trades been when prices are moving largely in one direction.
The foreign exchange market did brighten a bit in the first quarter, as the banks said their results were buoyed by diverging monetary policies around the world and increased volatility.

Despite the headaches, most large banks remain committed to foreign exchange because valuable clients like hedge funds and big companies demand it. For banks desperate to advise big companies on mergers and acquisitions, they see foreign exchange as a “gateway” toward attracting their more profitable business.
“Foreign exchange is not a complete loss leader for the banks,” said Fred Cannon, a banking analyst with the investment bank Keefe Bruyette & Woods. “But it is not a profitable stand-alone business either.”
Because so many buyers and sellers flood the foreign exchange market — more than $5 trillion changes hands every day — the money banks can charge for brokering trades tends to be lower than for products like derivatives.
To get an edge, prosecutors say, traders at the five banks colluded to pad their returns from at least 2007 and 2013. To carry out the scheme, one trader would typically build a huge position in a currency, then unload it at a crucial moment, hoping to move prices. Traders at the other banks would play along, coordinating their actions in online chat rooms.

The banks also misled their clients about the price of currencies, the federal and state authorities said, imposing “hard markups,” which one Barclays employee described as the “worst price I can put on this where the customer’s decision to trade with me or give me future business doesn’t change.”
In the invitation-only chat room known as “the cartel,” the stakes were high. “Mess this up,” one newcomer was warned, “and sleep with one eye open.”

Attorney General Announces Bank Fines
View Video Here 

Source here

Monday, February 9, 2015

Oil Could Plunge to $20 Before Recovering

With its significant fall from grace, speculators are busy betting on a bottom in crude and related oil & gas stocks. However, all those bottom calls may be in vain, according to a new report from Citi - which is getting a lot of attention on Wall Street Monday. Citi's commodities strategists Edward Morse wrote that the recent rally in crude prices looks more like a head-fake than a sustainable turning point and he sees oil heading to as low a $20 per barrel.

Morse said the recent rally was driven by drop in US rig count, continuing cuts in upstream capex, the reading of technical charts, and investor short position-covering. However, short-term market factors are more bearish, pointing to more price pressure for the next couple of months and beyond.
"Not only is the market oversupplied, but the consequent inventory build looks likely to continue toward storage tank tops," he wrote. "As on-land storage fills and covers the carry of the monthly spreads at ~$0.75/bbl, the forward curve has to steepen to accommodate a monthly carry closer to $1.20, putting downward pressure on prompt prices. As floating storage reaches its limits, there should be downward price pressure to shut in production."

The analyst doesn't see oil hitting a bottom until sometime between the end of Q1 and beginning of Q2 at a significantly lower price level in the $40 range. This, he said, is when markets should start to balance, first with an end to inventory builds and later on with a period of sustained inventory draws. While he said it's impossible to call a bottom point, oversupply and the economics of storage could push prices of WTI well below $40 and perhaps as low as the $20 range for a while.

Morse said it's highly unlikely that oil prices will follow an L-shaped future. "Prices are already too low to be sustainable," he said. "Now in a $45-55 range (whether Brent or WTI) they’re at a level that would result in disinvestment from oil. Capex would focus on cash generating activities, monetizing past spending – developing delineated discoveries, completing wells, but would avoid new acreage acquisition, seismic studies, exploratory drilling, and expensive marginal well drilling. Depletion rates would rise, supply growth would slow and then fall under a long, cold supply sweat."
He said a U-shaped recovery looks superficially more plausible, with prices falling to around $45 Brent, $35 WTI and lingering therefore before recovering. "But this likely underestimates the demand response and overestimates the robustness of supply to sustain production below operating costs for a significant portion of global output," he said.

While Big Oil and smaller E&Ps are focusing on a V-shaped price response this year and next, Citi believes a W-shaped path most likely, with the “Call on Shale” replacing the traditional “Call on OPEC” as a new barometer. - on Shale” replacing the traditional “Call on OPEC” as a new barometer — with low prices squeezing shale oil output growth and a price recovery resulting in a robust US supply response creating another price dip and a recovery to a new equilibrium level.
The firm reduced their WTI base case to $54 for 2015.

Related ETFs: iPath Dow Jones-Goldman Sachs Crude Oil Fund (NYSE: OIL), United States Oil Fund (NYSE: USO), Energy Select Sector SPDR ETF (NYSE: XLE).

(Source StreetInsider)

Wednesday, January 28, 2015

Swiss Central Bank Takes Another Swipe at the EUR

As most of the east coast of the U.S. focuses on the “historic” snowstorm of all proportions, rumored Swiss National Bank (SNB) action during the European session this morning has taken a swipe at the EUR bear.
Investors quickly priced in last Sunday’s Greek parliamentary results. In turn, the single unit sunk to a new 11-year record low outright (€1.1098). Once completed, the most vulnerable side for the EUR bear was always going to be the weaker short-EUR positions. The longer that the market was unable to break through key EUR support levels (€1.1000), the more vulnerable the EUR topside was going to become.
Of late, capital markets have not seen too much asset class price consolidation. The various asset price moves have been mostly fueled by fundamental data and event risk, accumulating in one directional and overcrowded positions. Currency pairs like the EUR/USD, GBP/USD, and AUD/CAD seem to be treading water. Not helping the EUR bear is the combination of stabilizing equity markets and U.S. and German bond yields holding above recent lows — they’ve managed to lift market risk appetite and weigh on the USD, for a short period at least.

Pros Happy to Recycle EURs
A large percentage of pro traders would have taken yesterday’s EUR fall as an opportunity to lighten up on their EUR short positions. Many have been hoping to recycle EURs at higher levels to improve their portfolio average while maintaining their core short views. The mention of the SNB rumors this morning has helped their cause. Despite the SNB’s credibility in policy setting having been tarnished after the franc flash crash, the central bank’s reputation in aggressively acting on FX and interest rates will always be feared by the market. The very fact that intervention was even uttered had the Swiss franc on the immediate move this morning. The key is whether it’s sustainable.

he CHF weakened ($1.0340) throughout most of the European session after SNB’s Vice President Jean-Pierre Danthine noted that the bank is prepared to intervene in FX markets as they have yet to stabilize. Dealers have been suggesting that the weak rise in sight deposits could be seen as an indication that the SNB has been in the market already this week after its de-pegging announcement two weeks ago. As the market heads stateside where trading is expected to be lighter, the CHF was well off its worst levels.

Commodity Price Divergence
The CAD, or loonie as the Canadian dollar is known, is trying to bounce off its six-year lows as crude oil prices reverse some of this year’s recent losses. The temporary rise in crude prices have been supported by a report that the Organization of the Petroleum Exporting Countries’ (OPEC) top officials believe that they may have hit a bottom. In other words, the oil cartel is trying to walk the commodity’s prices higher. The problem is that the officials’ argument does not trump the reality of a product glut.
Oil prices have been the loonie’s biggest driver year-to-date. If crude prices do happen to stabilize (down -55% over the past six months) then the CAD is expected to find some much needed help. Last week, the Bank of Canada’s Governor Stephen Poloz tried to play catch up with weaker commodity prices by slashing overnight interest rates (-0.25bps to +0.75%), citing his actions as an insurance policy against a collapse in crude prices.
With Canada being a commodity-sensitive exporter, any negative longer-term fluctuations in commodity prices will have a massive impact on Canadian growth and inflation, and so too do yield spreads. Wider U.S.-CAD bond yield spreads will always hurt the loonie. Technically, the USD has found resistance at the key $1.25 level. Nevertheless, the majority of investors remain better buyers of USDs on pullbacks, believing that the USD bull market and weaker commodity trend remains intact. Through $1.25, the CAD bear will hone in on the next major CAD support level at $1.30 rather quickly.

Gold Bugs Seek Consistent Momentum
Crude is not the only commodity making waves, yesterday gold futures fell the most this year on speculation that Greece’s anti-austerity party victory would not result in the country leaving the euro currency bloc, pressing demand for the safe-haven asset. The EUR rebounded from its 11-year low (€1.1098) in Asian trading on Monday, after new Greek Prime Minister Alexis Tsipras pledged to keep his country in the eurozone. In January, the yellow metal’s rise was supported by investors as Europe’s flagging economy drove demand for a store-of-value. The commodity is finding it difficult to hold a trend intact. Gold is at the big dollar’s mercy and the market’s whim toward risk or not.

Debt Auction No Match for East Coast Weather Bomb
Investors who want to buy new U.S. two-year paper will have to wait until tomorrow. The U.S. Treasury has rescheduled this week’s debt offerings due the current east coast weather conditions. The $26B 2’s and $15B floating rate maturities will take place at the same time tomorrow. The five-year $35B auction gets pushed to Thursday, ahead of the on-schedule $29B seven-year note sale.


Wednesday, December 31, 2014

The incredible stock-picking ability of SEC employees

A new report raises ethical questions about stock trades by employee at the Securities and Exchange Commission. (Reuters/Jonathan Ernst)
Forget hiring a top hedge fund to manage your portfolio. Your better bet might be an employee at the Securities and Exchange Commission, according to a new report suggesting that regulators are trading on inside information relating to investigations and upcoming enforcement actions.
In the report titled "The Stock Picking Skills of SEC Employees," researchers found that SEC employees' stock purchases look like your average person's. But when these employees sell their stocks, they appear to systematically beat the market by making sales within weeks of costly enforcement actions by the agency.
"These results suggest that SEC employees potentially trade profitably under the new rules, and that at least some of their profits potentially stem from trading ahead of costly SEC sanctions and on privileged non-public information," write Shivaram Rajgopal, a professor of accounting at Emory University, and Roger M. White, a doctoral student in accounting at Georgia State University. "In short, it appears that SEC employees continue to take advantage of non-public information to trade profitably in stocks under their regulatory purview."
A spokesperson for the SEC, which has made crackdowns on insider trading a priority in its enforcement division, declined to immediately comment.
The information was obtained from the SEC under a Freedom of Information Act request, but it was limited. The researchers did not have access to the portfolios of the SEC employees. And none of the trades were identified by employee, so the researchers could not tell how much in profits certain employees were earning, or whether employees with certain kinds of jobs or levels of power were able to make more money.
Instead, they built hedge fund portfolios where they went long on stocks that SEC employees buy and short on stocks they sell. The findings are startling.
Researchers found that out of the 56 enforcement actions against publicly traded companies during the time period analyzed, SEC employees traded ahead of six -- and were far more likely to sell rather than buy. "This fact pattern indicates that the monitoring mechanisms the SEC planned to impose to discourage such practice are either weak or nonexistent," the researchers say.
The six enforcement actions were against Bank of America (Feb. 4, 2010), General Electric (July 27, 2010 and Dec. 23, 2011), Citigroup (July 29, 2010), Johnson & Johnson (April 8, 2011) and JPMorgan (July 7, 2011).

In these cases where trades were made ahead of an announcement, the vast majority were sales. Take a look at the table below comparing the actions of SEC employees compared to the entire market, in various run-up periods ahead of an enforcement action. The disparity is striking. Thirty days or less before an announcement, for instance, more than 74 percent of trades by employees were sales, versus just half in the total market.

The SEC apparently did not begin tracking data on its employees' transactions until 2009. Even now, the report says that there is no way of knowing whether the agency is auditing the reported trades to verify their accuracy.
New rules from 2009 state that any employee must first obtain clearance for any securities transaction. The idea is that if the employee gets cleared for the stock trade, then the clearance will serve as evidence that the employee didn't do anything improper.
But the report's writers say that the profits made by employees still raise questions.
"Given that the SEC is charged by Congress with enforcing insider trading regulations against corporate officers and other market participants, our findings indicating abnormal risk adjusted profits on trades by SEC employees are arguably troubling," write Rajgopal and White.
Update: The SEC says it has an explanation. "Each of the transactions was individually reviewed and approved in advance by the Ethics office," said John Nester, spokesperson for the SEC. "Most of the sales were required by SEC policy. Staff had no choice. They were required to sell."
Nester explained that before staff can work on an issue that involves a company, they have to sell any holdings of stock in that firm. As a result, he said, there shouldn't be any surprise that a sale would precede the announcement of an enforcement action.


Thursday, November 20, 2014

If Everything Is Just Fine, Why Are So Many Really Smart People Forecasting Economic Disaster?

The parallels between the false prosperity of 2007 and the false prosperity of 2014 are rather striking.  If we go back and look at the numbers in the fall of 2007, we find that the Dow set an all-time high in October, margin debt on Wall Street had spiked to record levels, the unemployment rate was below 5 percent and Americans were getting ready to spend a record amount of money that Christmas season.  But then the very next year the worst economic crisis since the Great Depression shook the entire planet and everyone wondered why most people never saw it coming.  Well, now a similar pattern is unfolding right before our eyes.  The Dow and the S&P 500 both hit record highs on Monday, margin debt on Wall Street is hovering near record levels, the unemployment rate has ticked down a little bit and Americans are getting ready to spend more than 600 billion dollars this Christmas season.  The truth is that the economy seems pretty stable for the moment, and most people cannot even imagine that an economic collapse is coming.  So why are so many really smart people forecasting economic disaster in the near future?
For example, just consider what the Jerome Levy Forecasting Center is saying.  This is an organization with a tremendous economic forecasting record that goes all the way back to the Great Depression.  In fact, it predicted ahead of time the financial trouble and the recession that would happen in 2008.  Well, now this company is forecasting that there is a 65 percent chance that there will be a global recession by the end of next year…
In 1929, a businessman and economist by the name of Jerome Levy didn’t like what he saw in his analysis of corporate profits. He sold his stocks before the October crash.
Almost eight decades later, the consultancy company that bears his name declared “the next recession will be caused by the deflating housing bubble.” By February 2007, it predicted problems in the subprime-mortgage market would spread “to virtually all financial markets.” In October 2007, it saw imminent recession — the slump began two months later.
The Jerome Levy Forecasting Center, based in Mount Kisco, New York, and run by Jerome’s grandson David, is again more worried than its peers. Its half-dozen analysts attach a 65 percent probability of a worldwide recession forcing a contraction in the U.S. by the end of next year.
Could they be wrong?
It’s certainly possible.
But I wouldn’t bet against them.
John Hussman is another expert that is warning of financial disaster on the horizon.  He believes that we are experiencing a massive stock market bubble right now and that stocks are approximately double the value that they should be…
If you look at corporate profits and especially corporate profit margins, they’re one of the most cyclical and mean-reverting series in economics. Right now, we have corporate profits that are close to about 11% of GDP, but if you look at that series you will find that corporate profits as a share of GDP have always dropped back to about 5.5% or below in every single economic cycle including recent decades, including not only the financial crisis but 2002 and every other economic cycle we have been in.
Right now stocks as a multiple of last year’s expected earnings may look only modestly over valued or modestly richly valued. Really if you look at the measures of valuation that are most correlated to the returns that stocks deliver over time say over seven years or over the next 10 years the S&P 500 in our estimation is about double the level of valuation that would give investors a normal rate of return.
Could you imagine the chaos that would ensue if stocks really did drop by 50 percent?
Well, Hussman says that this is precisely what must happen in order for stock prices to return to historical norms…
Right now, like I say, we are looking at stocks that have been pressed to long-term expected returns that are really dismal. But more important than that, in every market cycle that we’ve seen with the mild exception of 2002, we’ve seen stocks price revert back to normal rates of return. In order to get to that point from here, we would have to have equities drop by about half.
If that does happen, it will make the crisis of 2008 look like a Sunday picnic.
Meanwhile, other very prominent thinkers are also warning that an economic nightmare is rapidly approaching.
Economic cycle theorist Martin Armstrong foresees major economic problems in 2015 which will ultimately lead to “civil unrest”  in 2016…
It looks more and more like a serious political uprising will erupt by 2016 once the economy turns down. That is the magic ingredient. Turn the economy down and you get civil unrest and revolution.

What is truly frightening is that we have never even come close to recovering from the last economic crisis.  One poll that was taken just prior to the recent election found that only 28 percent of Americans said that their families were doing better financially.  In addition, here are some more survey numbers about how Americans are feeling about the economy…
According to voter exit polls conducted by CNN, 78% said they are worried about the economy, with 69% saying that, in their view, economic conditions are not good. 65% responded that the country is on the wrong track vs. only 31% who believed that it is headed in the right direction.
Even though we are repeating so many of the same patterns that we experienced back in 2007, we are doing so with a fundamentally weaker economy.  The last crisis did a tremendous amount of permanent damage to us.  For an extensive look at this, please see my previous article entitled “12 Charts That Show The Permanent Damage That Has Been Done To The U.S. Economy“.
And there are lots of signs that much of the planet is already entering another major economic slowdown.  In a recent article, Brandon Smith summarized some of these.  He says that we are currently witnessing “the last gasp of the global economy“…
Global exports, and thus consumer demand, are plunging. Germany, the only pillar left to prop up the failing European Union, has experienced a severe decline in exports not seen since 2009.
China, the largest exporter and importer in the world, and Chinese companies, have been caught in a number of instances using fraudulent invoices to artificially inflate their own export numbers, in some cases reporting 50% more exported goods than had actually existed.
China’s manufacturing has also declined for the past five months, exposing the nature of its inflated export stats and indicating a global slowdown.
The Baltic Dry Index, a measure of global shipping rates for raw goods, and thus a measure of demand for shipping, continues to drag along near historic lows.
The U.S. consumer (the only economic asset the U.S. has besides the dollar’s world reserve status), has seen declines in spending as well as wages.
In the meantime, long term jobless Americans continue to fall off welfare rolls by the millions, making unemployment numbers look good, but the overall future picture look terrible as participation rates dissolve into the ether of government statistics.
How is such poverty being hidden? Foodstamps. Plain and simple. Nearly 50 million Americans now subsist on food stamp programs today, and this number shows no signs of dropping. In states like Illinois, two people sign up for food assistance for every citizen that happens to find a job.
From time to time, I get accused of “spreading fear” and of being obsessed with “doom and gloom”.
But that is not the case at all.
I actually want our economy to stay stable for as long as possible.  Many Americans don’t realize this, but even the poorest of us live in luxury compared to much of the rest of the world.  It would be wonderful if we could all live out our lives in peace and quiet and safety.
Unfortunately, it is simply not going to happen.
And it does not take an expert to see what is coming.
Anyone with half a brain should be able to see the economic disaster that is approaching.
There is hope in understanding what is happening and there is hope in getting prepared.  Millions of Americans that are willingly blind to our problems are going to have their lives absolutely destroyed when they get blindsided by the coming crisis.  So please use this brief period of relative stability to get prepared and to warn others.
Once this false bubble of hope runs out, all of our lives are going to dramatically change.
By Michael Snyder Source HERE 

Monday, August 26, 2013

From Dove To Hawk And Back To Dove; Bernanke Moves Markets

Question: How do you make stocks and bonds rise in price at the same time and increase the wealth of the investor class?

Answer: You declare your intent to buy $85 billion of bonds and mortgages every month for a considerably extended period as a way to maintain the lowest rates of interest in recent history.

Question: How do you drive the price of stocks and bonds lower at the same time, reducing the wealth of the investor class, and threatening the housing recovery?

Answer: You announce your intention to introduce tapering and reduce the amount of bonds and mortgages you are buying every month, with the intent of ultimately ceasing such purchases completely at some uncertain date in the future.

Question: How do you correct(reverse) the intent to begin phasing out quantitative easing in the light of stock and bond markets reacting in an overly negative manner that threatens the economic recovery?

Answer: You announce that you may indeed reduce the dollar amount of bonds and mortgages you are buying, but not right away. And you will certainly not be increasing the interest rate for borrowing money in the foreseeable future, or most certainly not until the unemployment rate falls from 7.6% to 6.5%.

Question: What do you do if the latest attempt at manipulation (changing signals) may not be sufficiently convincing. After all, the yield on the 10 year Treasury note is close to its recent peak of 2.70%. The cost of a mortgage has backed up as well.

Answer: You strongly hint that even if the U.S. unemployment rate falls to 6.5%, the Fed may well, probably will, keep interest rates near zero. This is a major revision to what Bernanke has been positing ever since May 22nd, when bond traders began getting net short Treasuries. They meant to coin profits in the instant spike in interest rates.

Hint; this promise might require Bernanke to remain at the helm of the Fed for the near or medium term future, so as to personally steer this, mind you, absolutely fresh, new, dramatic change in policy. It underscores just how dreadfully unpleasant the past few weeks of interest rate hikes have been for Bernanke & Co. The unanticipated negative reaction around the world was not helpful for recovery in either the U.S. or Europe or China.

Question: What can we expect Bernanke to do over the remainder of 2013?

Answer: Divide tapering into two parts, the process of buying securities and the hiking of interest rates. Now that he has awoken to the risks in giving weight to the hawks on the Fed board, Bernanke will assert himself more on the dovish side of monetary policy, so that all the good works since 2009 will not be debilitated in any manner. A very tricky business with ramifications for all of us. I must say that I’d rather have Bernanke handling this tricky balancing act than some more unknown economist. Maybe he could bring the exceptionally wise Stanley Fischer, Bernanke’s PHd. adviser at MIT in 1979 and the retiring head of the Bank of Israel, back to Washington to help oversee the transition in monetary policy.

Question: What has Bernanke, and therefore we concerned citizens, learned from the crisis of 2008 and the meltdown in the markets as it damaged economic growth?

Answer: The lesson learned, Bernanke told the National Bureau of Economic Research gathering was a measure that “had been forgotten to some extent… severe financial instability can do grave damage to the broader economy.” The maintenance of financial stability is “coequal with the responsibility for the management of monetary policy.” The Fed must integrate the two. So, we will watch and wait to see how integrating the two, financial stability and the management of monetary policy, go the next 6 months. Pray, beautifully well, we hope. Source: HERE

Saturday, July 20, 2013

$20 Mil Awarded in Internet Libel Case

S.C. Court Grants Judgment to $RMCP Revolutions Medical and Its CEO

CHARLESTON, SC--(Marketwired - July 01, 2013) - Revolutions Medical Corporation (RMCP), a Charleston, S.C.-based medical device and software applications company, and its Chief Executive Officer, Rondald Wheet, have been awarded more than $20 million in a default judgment against Phillip Maurice "Marty" Hicks. A special referee for the South Carolina court awarded the company $3.6 million in compensatory damages and $1.5 million in punitive damages. Wheet was awarded $12,010,000 in compensatory damages and $3 million in punitive damages.

The Charleston County Common Pleas Court found Hicks liable for Internet defamation in September 2011 after he was defaulted as a sanction for disobeying a court order requiring him to participate in discovery in the case. In his decision, the special referee took into account the malicious intent and duration in which Hicks waged his cyber smear campaign against Revolutions Medical and Wheet. He also found that Hicks intentionally interfered with a grant the company was to receive from the Department of Defense in September 2010 to supply its patented RevVac™ safety syringes to its HIV/AIDS Prevention Program.

"This judgment sends a clear message to our shareholders and the market that there are legal and financial consequences when you commit libel," states Wheet, who also serves as the Company's Chairman of the Board. "Looking at the bigger picture, small public companies are vulnerable and can fall prey to these 'short and distort' campaigns waged by individuals, hedge funds and traders. Not only can these campaigns violate securities laws, they can also do severe harm to companies by eroding shareholder value, making it difficult to raise capital, increasing costs and legal expenses, delaying the execution of business plans, stunting job creation, and stymieing the entrepreneurial spirit of small American businesses -- all so they can profit by their actions."

According to Mount Pleasant attorney Stephen Bucher of Bucher Legal LLC, the $20 million awarded in this case should serve as a warning to anyone who thinks they can hide behind an alias to conduct a cyber smear or engage in Internet bullying. "The use of cyber consultants with data mining skills combined with some good old fashioned legal investigation almost ensures that those engaging in these illegal activities can be found," states Bucher who represented the plaintiffs in this case. "The era when someone could use the cloak of anonymity of the Internet to destroy reputations and lives is over. There is no cloak of anonymity. We're coming for you."

Bucher adds, "I admire Wheet for his persistence in this case. He was willing to do what it took legally to take down Hicks."
Wheet notes that he and his company plan to pursue every available legal avenue to collect on this judgment against Hicks.

About Revolutions Medical Corporation
Revolutions Medical is a safety medical device and software application company. Its proprietary technologies and products include: the RevVac™ safety syringe, safety blood drawing device, the RevColor™, RevDisplay™, and Rev3D™ software tools that are compatible with standard MRIs and standard Picture Archiving Computer Systems (PACS) and prefilled auto-retraction vacuum safety syringes.

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The information contained herein includes forward-looking statements. These statements relate to future events or to our future financial performance, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. You should not place undue reliance on forward-looking statements since they involve known and unknown risks, uncertainties and other factors which are, in some cases, beyond our control and which could, and likely will, materially affect actual results, levels of activity, performance or achievements. Any forward-looking statement reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in these forward-looking statements, even if new information becomes available in the future.

Revolutions Medical Corporation
Investor Relations
Phone: (843) 606-9461

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