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Kevin Connor: Goldman’s Role in Greek Crisis Is Proving Too Ugly to Ignore

Here are some business news, courtesy of HuffingtonPost.com:

Goldman Sachs appears to be testing the limits of its special talent for avoiding all accountability following revelations of its role in exacerbating the Greek debt crisis.

The bank has come under heavy criticism from European political officials over its role in helping Greece hide its debts, and on Wednesday, Greek labor unions staged a historic strike that shut down the country’s national infrastructure in response to economic policies urged by bankster elites. The European turmoil has forced US officials to take notice, and scrutiny of the bank is now coming from the unlikeliest of quarters, with Ben Bernanke telling Congress on Thursday that the Federal Reserve is looking into Goldman and questions surrounding the bank’s swap transactions with Greece.

Bernanke was vague about what, exactly, the Fed is investigating, and it is possible that the inquiry will go nowhere. But the fact that the Fed chair would make remarks that amplify concerns about Goldman’s role in Europe is a sign that the political winds have shifted significantly since Matt Taibbi’s “vampire squid” metaphor first captured the public imagination last summer. The populist outcry against bankster fraud and collusion finally shows signs of steering the authorities towards a more oppositional, watchdog role.

The truly scandalous story with respect to Goldman Sachs and Greece — that the bank may have been speculating heavily in the Greek debt markets at the same time it was trying to help the country hide its debt — is also starting to gain traction. During his testimony, Bernanke raised concerns about speculative activity in the Greek debt markets and said that the SEC was investigating, and Phil Angelides, chair of the Financial Crisis Inquiry Commission, said that he was particularly concerned about Goldman’s role in betting against securities that it had helped create.

On Thursday the New York Times published a story with the headline <a href=”http://www.nytimes.com/2010/02/25/business/global/25swaps.html?dbk”>”Banks Bet Greece Defaults on Debt They Helped Hide.” The article reported that a company backed by Goldman and other banks set up a new index in September of this year that investors could use to bet on the likelihood that Western European countries like Greece would default on their debt.

This is history repeating itself: the very same company that created this index set up a similar index in early 2006 that allowed investors to bet on the likelihood of defaults in the subprime bond market. That index was a collaboration between Markit and CDS IndexCo, a consortium of 16 banks, including Goldman Sachs, which has since been acquired by MarkIt. The acting chairman of CDS IndexCo was Goldman Sachs managing director Bradford S Levy, suggesting that Goldman has significant power within Markit now.

Guess which investors cleaned up on that index in 2006 and 2007? Goldman Sachs and partner-in-crime John Paulson, the hedge fund manager who made billions betting against the subprime sector.

The sovereign index and its subprime predecessor would be less troubling if there was some transparency around Markit, the pricing mechanisms it uses, its owners (including Goldman Sachs), and so forth, given the critical informational role it plays in markets which threaten global financial stability quite frequently. The Department of Justice opened an investigation of the company for possible anti-trust violations last summer.

If Goldman is, in fact, using swaps to bet heavily on the likelihood of a Greek default at the same time that it is helping the country hide its debts, the parallels to its corrupt, cynical, and incredibly greedy housing bubble investment strategy extend beyond the Markit index. The game plan is fairly simple: stuff some entity full of hidden liabilities by devising securities that mask true levels of exposure, collect enormous fees for doing it, then find ways to make enormously profitable bets against the financial carcass created in the process.

<a href=”http://blog.littlesis.org/2010/02/16/goldman-john-paulson-cdo-scheme-stinks-of-fraud/”>Goldman Sachs and John Paulson did this with AIG, devising complex securities known as “synthetic CDOs” which were composed entirely of bets on a set of mortgage pools. Paulson (not to be confused with former Treasury Secretary Hank Paulson) picked the mortgage pools, selecting the ones that were most likely to experience high levels of foreclosure. Goldman then created the securities and sold them to investors like AIG. The bets were essentially designed to fail, with Paulson (and Goldman) on the winning end. The hidden exposure was massive enough to take down AIG, threaten the world financial system, and necessitate a government bailout. These bailout funds were then passed through to Goldman Sachs.

Carolyn Maloney has noted these parallels and is now calling for a Congressional hearing on Goldman’s involvement in the Greek crisis.

Greece is far less likely to implode than AIG, and the liabilities that Goldman tucked into its national accounts are less severe. But now that the country is dealing with the prospect of financial ruin, <a href=”http://blog.littlesis.org/2010/02/15/what-is-john-paulson-doing-in-greece/”>Paulson and Goldman appear to share the same vulture flight pattern, once again. Paulson & Co is reported to have been speculating heavily in Greek debt markets with a team of 20-30 traders focused on the country. Goldman is also rumored to have been one of these speculators.

According to the Wall Street Journal, Paulson has since exited his large bearish bet on Greek debt. But in a sign that Paulson’s Greek adventures haven’t ended, Goldman recently took representatives of his hedge fund on a “field trip” to Greece:

On Jan. 28 and 29, analysts from Goldman Sachs Group Inc. took a group of investors on a field trip to meet with banks in Greece. The group included representatives from about a dozen different money managers, say attendees, including Chicago hedge-fund giant Citadel Investment Group, the New York hedge fund Eton Park Capital Management, and Paulson, which sent two employees, say people who were there. Eton Park declined to comment.

During meetings with the Greek deputy finance minister and executives from the National Bank of Greece, among other banks, some investors raised tough questions about the state of the country’s economy, according to these people.

Greece appears to have been negotiating for its economic future with Goldman Sachs and its network of hedge fund colluders, many of whom have taken large speculative positions on Greek debt. This amounts to an unofficial diplomatic mission, a negotiation between a sovereign country and the sociopathic financiers who hold sway over its economic fortunes. Is Europe really ok with that?

The Wall Street Journal article goes on to report on a Manhattan dinner party where a group of hedge fund managers discussed their bearish bets on the Euro. The article suggests that the funds are partnering on their trades, and includes a somewhat confusing sentence: “There is nothing improper about hedge funds jumping on the same trade unless it is deemed by regulators to be collusion.” So it isn’t collusion unless regulators have “deemed” it as such? And Madoff wasn’t actually running a Ponzi scheme before the SEC noticed?

The growing turmoil in Europe and Bernanke’s comments may signal that we’ve reached a tipping point — that these financial firms will no longer be able to avoid all substantial inquiries into their business practices, and that they’ll no longer hold sway over economic policies here and abroad. Not that Bernanke himself will follow through. But the need for a significant, public investigation of these individuals and their firms has become so pressing that even the most compromised US officials are paying it lip service.

Whether it happens here or in Europe, Goldman’s day in court is drawing near.

Dennis A. Henigan: Starbucks Sticks To Its Guns. Why?

Here are some business news, courtesy of HuffingtonPost.com:

In case you missed it, last Saturday was “Starbucks Appreciation Day.” No, it was not a gesture of support from lovers of strong coffee (like me). The “appreciation” was on behalf of Americans who believe it is their sacred right to have a handgun with them wherever they go - even to carry it openly to make sure the rest of us know who are the real defenders of the Second Amendment.

The “open carry” movement has been convening groups of its followers to meet up at restaurants and coffee shops, with pistols, revolvers and ammo hanging from their hips. Two major retail chains who were “open carry” targets (so to speak) - California Pizza Kitchen and Peet’s Coffee & Tea - reacted quickly by announcing strict “no guns” policies. Starbucks, on the other hand, has earned the “appreciation” of the gun-toters by becoming the “safe house” for the “open carry” movement.

Starbucks’ official response has been to offer the assurance that it will “continue to adhere closely to local, state and federal laws” on this issue. This is an evasion, not an answer.

The fact is that Starbucks would also “adhere closely to local, state and federal laws” by prohibiting guns on its premises. The law allows Starbucks and other retail businesses to make their own policy on guns. Starbucks has made a choice to recognize the rights of a few gun extremists to show off their weaponry in its stores and ignore the rights of the vast majority of its customers to enjoy their coffee and muffins free of the fear, intimidation and risk of violence inherent in the “open carry” experience. Starbucks seeks to hide behind “local, state and federal law,” but in truth, there is no place for it to hide.

For a glimpse into its future as the corporate best friend of the gun-toters, Starbucks should consider the experience of a California restaurant chain, Buckhorn Grill. On February 6, a Buckhorn restaurant in Walnut Creek, California, was visited by about 100 men carrying their highly-visible guns. A recent New York Times editorial said this must have “looked like a casting call for a Sam Pekinpah shoot-’m-up.” Shortly thereafter, Buckhorn’s management made clear that the restaurant had always had a “no weapons” policy and apologized for the “misunderstanding” that had led to the “open carry” event. How many gun carriers need to show up at Starbucks for the company to realize what a nightmare it is creating for its customers and employees?

The issue here is much bigger than Starbucks and involves more than just “open carry.” Starbucks’ new gun-wielding friends envision an America in which guns permeate American society. A pitched battle is underway that will determine whether their vision is realized. It started with the gun lobby’s largely successful campaign to make it easier to obtain a license to carry concealed weapons in public. Now the “gun rights” extremists are trying to break down the barriers limiting where concealed weapons can be carried. As of this week, with the shameful acquiescence of the Obama Administration, loaded guns will be allowed in national parks for the first time since they were banned by the Reagan Administration. In over twenty states, the gun lobby has tried, and thankfully failed, to pass legislation to force colleges and universities to allow guns on campus. The battle continues.

It may be that “open carry” will turn out to be the “secondhand smoke” of the gun debate. On the tobacco issue, it was one thing for people to subject themselves to the unhealthy effects of cigarettes. It was quite another for the effects of smoking to be so visibly inflicted on non-smokers. Smoking in public became a new, and transforming, focus of the debate, leading to far-reaching restrictions on where people can smoke.

On the gun issue, although the carrying of concealed weapons in public subjects everyone to enormous risk, the risk is, by definition, concealed. Perhaps this is why my tobacco-growing home state of Virginia now no longer allows restaurant customers to smoke, but will allow them to carry concealed weapons (and may now be poised to allow them even to carry concealed in restaurants that serve alcohol!). “Open carry,” unlike concealed carry, confronts everyone with the risks of guns in public, in a very direct and highly-visible way. We can only hope that the “open carry” movement will backfire, bringing our country back from the brink of the “guns everywhere” vision of America now being foisted on us by the NRA and the most dedicated supporters of its extremist agenda.

Over 27,000 Americans so far have signed the “no guns” petition circulated by the Brady Campaign to Prevent Gun Violence and CREDO Action calling on Starbucks to keep guns out of its stores. Please join them by going to www.bradycampaign.org. Tell Starbucks that, in your America, parents ought to be able to take their families into coffee shops without facing the intimidation and danger of guns.

For more information, see Dennis Henigan’s new book, Lethal Logic: Exploding the Myths that Paralyze American Gun Policy.

Fannie Mae Posts 4Q Loss, Wants $15.3 Billion In Additional Government Aid

Here are some business news, courtesy of HuffingtonPost.com:

WASHINGTON — Fannie Mae needs another $15 billion in federal assistance, bringing its total to more than $75 billion. And worse, the mortgage finance company warned its losses will continue this year.

The rescue of Fannie Mae and sister company Freddie Mac is turning out to be one of the most expensive aftereffects of the financial meltdown. The new request means the total bill for the duo will top $126 billion.

And the pain isn’t over. Fannie warned Friday that it will need even more money from the Treasury, as unemployment remains high and millions of Americans lose their homes through foreclosure.

Fannie Mae reported Friday that it lost $74.4 billion, or $13.11 a share, last year, including $2.5 billion in dividends paid to the government. That compares with a loss of $59.8 billion, or $24 a share, a year earlier.

Fannie Mae, which was seized by federal regulators in September 2008, has racked up losses totaling $136.8 billion over the past three year.

Late last year, the Obama administration pledged to cover unlimited losses through 2012 for Freddie and Fannie, lifting an earlier cap of $400 billion.

Earlier in the week, Freddie reported a loss of almost $26 billion for last year. The company didn’t request any more money, but expect to do so later this year.

Fannie and Freddie play a vital role in the mortgage market by purchasing mortgages from lenders and selling them to investors. Together the pair own or guarantee almost 31 million home loans worth about $5.5 trillion. That’s about half of all mortgages.

“Through this prolonged stress in the housing market, we are helping homeowners across the country, supporting affordable housing, and providing financing to keep the residential markets functioning,” the company’s chief executive, Mike Williams, said in a statement.

The two companies, however, loosened their lending standards for borrowers during the real estate boom and are reeling from the consequences. At the end of last year, nearly 5.4 percent of Fannie Mae’s borrowers had missed at least one payment – dramatically higher than historic levels.

During the most recent quarter, Washington-based Fannie suffered $11.9 billion in credit losses and a $5 billion write-down for low income tax credit investments.

That led to a fourth-quarter loss of $16.3 billion, or $2.87 a share, including $1.2 billion in dividends paid to the Treasury Department. It compares with a loss of $25.2 billion, or $4.47 a share, in the year-ago period.

Despite Lack Of Work, Millennial Generation Remains Buoyant

Here are some business news, courtesy of HuffingtonPost.com:

The recession has created a dismal employment picture for 18- to 29-year olds, the worst since 1972. But despite that harsh economic reality, today’s “Millennials” remain bizarrely rosy about their prospects.

That’s according to a recent survey conducted by the Pew Research Center, indicating that nine out of ten 18- to 29-year-olds, dubbed the Millennial generation or Generation Next, believe they’ll have enough money to lead the kind of life they want.

The facts on the ground are grim. According to the Bureau of Labor Statistics, 37 percent of all Millennials are either unemployed or out of the work force. The last time a generation saw numbers that bad was when the last of the Baby Boomers were coming of age.

And the Millenial optimism contrasts sharply with the more dour outlook of today’s Boomers, only 46 percent of whom told Pew they expect to have the financial security they’d like.

One factor could be that, for a large chunk of these young people, the vicissitudes of adult life have yet to set in. According to the survey, 36 percent of all 18- to 29-year-olds depend on their parents for financial assistance. For 18 to 24 year olds, it’s 50 percent.

Indeed, one-in-six older Millennials, age 22 and older, has boomeranged back to a parent’s home on account of the recession.

On the bright side, the Pew survey suggests that this generation is shaping up to be among the most educated in recent history. 54 percent of all of Millennials currently attend or have attended college, compared to 49 percent of Generation Xers at a similar age.

5 Top Experts Reveal Their Secrets for Radiant Success

Yours truly GordonWebbo today wants you to read the following article, courtesy of this site:

Profit or Loss?

Yours truly GordonWebbo today wants you to read the following article, courtesy of this site:

Going into business seems to be the best option to cope with today’s ever-increasing cost of raising a family. It becomes even more relevant when most salaries are unable to keep up with the rising cost of commodities. If you’re thinking of doing business on the side, one of the key issues you’ll need to weigh carefully is how you price your items. Too low or too high a price is never good for business.

Here’s what you need to keep in mind when you set a price.

Input all costs

One of the first things to do is get the basic costs right.

• Weigh or portion the raw materials to get an accurate picture of your costs.
• Don’t forget to consider items like electricity, gas, labor, and other items needed to make the product.
• Monitor how much time it takes to produce your product so that you can compute labor costs.
• Factor in other operating costs like marketing expenses.

Mark-up your product

Once you have done the costing, ask yourself the amount of profit that you want to make. If you want to earn $10.00 per product, put that amount on top of your costs to get your selling price.

Market pricing

While the markup should be satisfactory to you, you must also take into consideration the price that your market can take to ensure that they will still buy your product. Your price must be competitive. If two or three of you sell the same product, either you price it the same or lower as long as your costs are covered.

Too high a price may put you out of market range, and too low a price may prompt possible clients to wonder about the quality.  Finding that happy middle ground assures you that clients can still afford to buy your product while covering your costs.

Jim Thomas: Only 10% Read Contract Before Signing; Remainder Aren’t Smarter Than a 7th Grader

Here are some business news, courtesy of HuffingtonPost.com:

My law practice is dominated by contracts–short, long, confusing, one-sided; micro-font printed and by-the-pound custom door-stoppers. Folks who sign before fully understanding, or sometimes even reading, a legal document never cease to amaze and keep armies of trial lawyers in business. While I’ve seen this in practice, I’ve never had any quantitative data on the extent of the problem, that is until now.

The 2010 Denver Metropolitan Regional Science & Engineering Fair is February 24 and 25. Hundreds of students, grades 6-12, will set up their projects, an amazing array of intellectual curiosity, in the Denver Museum of Nature and Science. My 7th grade daughter’s middle school held their science fair last week in preparation for Metro. In a room packed with displays, it was a study of contract-signing behavior that grabbed my attention.

This 7th grade scientist/lawyer had stationed herself in the Cherry Creek Mall with a clipboard and a bowl of chocolates. She asked shoppers to help her compare the relative sweetness of the chocolates, but of course, first, they needed to sign a one-page, printed release. If they read the release, however, the subjects would learn that what she really wanted was for them to flip the page and draw a happy face on the back.

Only two of her twenty subjects drew a circle with eyes and a smile, and one of those two first apologized for having to read the consent form, because she is a lawyer. The click-to-accept contracts of the internet age and releases as justifiable paranoid responses to a litigious society apparently wore the rest into legal apathy. Maybe you, too.

Standardized contracts offered on a take-it-or-leave-it basis are, in legal circles, often referred to as “adhesion contracts.” There are legal theories and court cases on why adhesion contracts are unconscionable and thus unenforceable–sometimes.

Is there a better example of a take-it-or-leave-it contract than the terms of use for social media networking sites like Facebook? A recent attack on Facebook’s terms of service as an unenforceable adhesion contract, however, was rejected by a federal court. Law Professor Eric Goldman writes about the case in his <a href=”http://blog.ericgoldman.org/archives/2010/01/facebook_user_a_1.htm” target=”_hplink”>Technology & Marketing Law blog:

<a href=”http://blog.ericgoldman.org/archives/2010/01/facebook_user_a_1.htm” target=”_hplink”>

It’s harder to trump properly formed online user agreements than most people wish, and this case is a small example of that. Facebook users who are unhappy with Facebook’s user agreement can find recourse in a variety of ways, but assuming the contract is going to fail in court is one of the least preferred methods.

If legal issues arise under an unread or merely skimmed contract, resolving the issues by voiding the contract requires judicial action. That means long waits, legal fees, stress and hours of your time. Even if you succeed in defeating the contract–and that is hardly a given–think of what it has cost you.

So read before signing. If a contract is important, hire a lawyer to work with you. Even a take-it-or-leave-it deal gives you the choice of leaving it; if you do take it, take it knowing what is expected of you. Most likely it is more than a happy face.

Speaking of happy faces, the next time you are enjoying the spray of your morning shower in your face, consider the following photo from my daughter’s Metro project. She and a partner tested shower heads for mold and bacteria growing inside the shower head. So read your contracts and occasionally run your shower head through your dishwasher.

Canadian Entrepreneurs - The Successful Ones On The Web

Yours truly GordonWebbo today wants you to read the following article, courtesy of Top-Web-Entrepeneurs-Plan-It.com:

An increasing number of Canadian entrepreneurs are succeeding on the Web. Who are they? Who and what is behind their success? Here is their story.

Top Tips for an Interview

Yours truly GordonWebbo today wants you to read the following article, courtesy of this site:

• Prepare. If you don’t come prepared, you might as well not turn up at all. It will be perfectly obvious that you don’t have a clue what you’re talking about.
• Be smart. First impressions are everything, and if you look smart, the person conducting the interview will assume that you will always look this way.
• Make sure you’re on time. If you ensure that you know exactly where you’re going and how long it’s going to take for you to get there before the day itself, you will know that you will be on time. It is rare that somebody will get a job if they are not on time for their interview.
• Be truthful in your CV. While it might look good if you can speak fluent French, German and Finnish, they may ask you to demonstrate this, and you will look a little silly if you actually can’t speak them at all. Plus, they’re not very likely to believe anything else that you said on your CV either.
• Be polite. If you swear, you’re not going to get the job. Make sure your language is polite and clean, and you will be seen in a much better light because of this.
• Be confident. If you have eye contact with the person you’re speaking to, you’re more likely to be viewed positively than if you’re looking at the desk or out of the window for the whole time.
• Posture. Sit up straight, but don’t look too formal. If you do this, you might look a little too nervous, so you have to try to strike the right balance between being formal and being comfortable in the interview situation.
• Get the handshake right. If you make it too firm or too soft, they might judge you because of it. Practice with your partner or a friend beforehand and you will impress them without them even knowing about it.
• Smile. If you look like the kind of person who’s going to have a positive effect on the current workforce, you’re more likely to get the job than if you look like you’re going to be frowning the whole time.

Online Visibility Tip - Use your real name, please.

Yours truly GordonWebbo today wants you to read the following article, courtesy of this site: