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Moments after Bank of America reported at today’s Goldman financial conference that its Q4 trading revenues would be down both Q/Q and Y/Y, it was Citi’s turn to warn that the current quarter will be the latest disaster in a long series of revenue disasters, with Q4 revenue said to drop 5% from a year ago, however, despite the drop, Citi would still see a “marginally profitable” quarter. Supposedly this means that a few hundred million shares of stock will have to be repurchased to give the optics that EPS is rising even as revenues continue to drop.

That was to be expected in a financially-engineered, centrally-planned world in which there is no institutional volume left, and all the rigged market levitation takes place on the back of negligible volumes by HFT algos, as well as stock buyback VWAP orders.

What, however, was a surprise, is that alongside the revenue warnings, Citi’s CEO Corbat also announced yet another $2.7 billion in legal, related charges in 4Q, as well as another $800 million in repositioning expenses.

This simply means that for yet another quarter Citi will be charged with billions in recurring, non-one time “one-time, non-recurring” charges which will be dutifully added back to non-GAAP EPS by analysts at all the other banks (whose criminal employers are now engaged in the same racket with the US government).

But what it really means is that it cost Citi some $3.5 billion to keep its employees out of jail for yet another 3 months.

Confused? Then please re-read “$178 Billion In Government Kickbacks: Meet The World’s Biggest Organized Crime Syndicate” where we explained a few very simple things:

Who, in simple numeric terms, is the world’s biggest organized crime syndicate?

 

The answer, courtesy of a new report by the Boston Consulting Group,
which shows the transfer of some $178 billion in litigation costs into
the pockets of  government appartchiks in the past 6 years, is clear.

 

Banks.

 

via Zero Hedge http://ift.tt/1ug9u60 Tyler Durden

Bond prices in Venezuela have totally collapsed this morning – at 45c on the dollar, they are the lowest since 1998 – as the realization of the "abyss" they are staring into sparks an exodus from all credit positions in the country. VENZ 5Y CDS rallied 130bps which signals hedgers unwinding and the simultaneous sale of the underlying bonds implies broad-based capital flight (and profit taking) as 1Y CDS surges to record highs at 4830bps.

 

VENZ Bond prices collapse to 1998 lows…

 

• VENEZUELA 2027 DOLLAR BONDS FALL TO LOWEST SINCE 1998

Venezuela's 1Y CDS has smashed to record highs implying imminent devaluation or default…

 

If you didn't think this was serious, think again. (as Bloomberg reports)

The scores of money managers and analysts who crowded into Cleary Gottlieb Steen & Hamilton LLP’s panel discussion on Venezuela last week are a testament to the deepening concern over whether President Nicolas Maduro can make good on the nation’s debt obligations.

 

During the two-hour event on the 39th floor of the law firm’s downtown Manhattan office, some 150 attendees pressed the lawyers on an array of potential scenarios if Venezuela defaulted, according to interviews with six attendees who asked not to be identified because the meeting was private. Among the topics debated were whether the state oil company’s U.S. gasoline stations could be seized as collateral and whether it was legally possible for Venezuela to restructure the producer as an empty shell to avoid bondholder claims, they said.

 

For a country that hasn’t missed a foreign bond payment in decades, the questions reflect growing speculation the socialist revolution that transformed Venezuela over the past 15 years under Hugo Chavez and now Maduro has finally pushed the nation to the brink of economic collapse. After this year’s plummet in oil, which accounts for almost all of Venezuela’s exports, investors are now clamoring for insights from the law firm that represented Argentina in two defaults on how the government might defend itself when the money runs out.

Of course, Maduro is vehemnt that it's not his fault…

Maduro said in a televised speech last night that ratings companies had imposed a “financial blockade” on Venezuela to prevent it from borrowing abroad, and that opposition politicians were to blame for the country’s economic woes.

 

“We have a financial blockade impeding us from getting financing we need to confront the fall in oil prices,” he said in Caracas. Venezuela has lower credit ratings “than countries at war or with Ebola. This has political causes.”

And it appears by the bond price plunge and modest CDS rally in 5Y suggests these various hedged VENZ bond holders did not like what they heard and unwound all their positions.

Which makes sense, as we concluded previously (read more here),

The punchline: "We are thus skeptical that the economic team's plan to tap international lenders, including China, over coming weeks will yield any tangible results."

 

What this means in simple terms is that Venezuela is now desperate for any cash. As CNBC's Silvana Ordonez reports, citing Diego Moya-Ocampos, a senior political risk analyst at IHS, "Clearly the government is trying to send signs to the market that they are working on necessary adjustments that the economy needs in order to honor international commitments and keep up with social policies, which are essential for political stability. However, these policy adjustments are not enough. This reflects simply that the government is desperately looking for funds to compensate for the lost revenues from declining oil prices."

*  *  *

via Zero Hedge http://ift.tt/1ug9u5V Tyler Durden

Less than two weeks after penning his “gold-is-a-6000-year-old bubble” propaganda, which understandably did not include the following chart…

 

… Citigroup’s Willem Buiter was just made an honorary member of the Council of Foreign Relations.

Distinguished Economist Willem Buiter Joins CFR as Senior Fellow

 

December 9, 2014—Willem H. Buiter, a renowned macroeconomist and global chief economist at Citigroup, has joined the Council on Foreign Relations (CFR) as an adjunct senior fellow. His work will focus on geoeconomics, deglobalization, international financial institutions, and global economic governance.

 

“We are thrilled to have someone of Willem Buiter’s experience and reputation joining CFR,” said CFR President Richard N. Haass. “His presence will make an already strong economics program that much stronger.”

 

Buiter is the newest addition to CFR’s Maurice R. Greenberg Center for Geoeconomic Studies, which provides analysis on how economic and geopolitical forces interact to influence world affairs.

 

Prior to joining Citigroup, Buiter spent six years as a professor at the London School of Economics and Political Science, teaching political economy.

 

From 2000 to 2005, he was chief economist and special counsel to the president at the European Bank for Reconstruction and Development, and from 1997 to 2000 was an external member of the Monetary Policy Committee of the Bank of England.

 

Additionally, Buiter has been a consultant to the International Monetary Fund, the World Bank, the Inter-American Development Bank, the Asian Development Bank, as well as to other multilateral institutions, national governments, and central banks. He was also a senior advisor at Goldman Sachs International and a member of the Academic Advisory Board of APG Investments.

 

Buiter was a full-time teacher and academic researcher for nearly three decades. He holds a BA in economics from Cambridge University, and an MA, MPhil, and PhD in economics from Yale University.

We can only hope this is an honorary title for his anti-gold crusade. It surely isn’t for the accuracy of his “90% probability of a Grexit” made in 2012.

In summary:

1. Write rambling anti-gold missive
2. Become “senior fellow” at the CFR
3. Profit

via Zero Hedge http://ift.tt/1GeJUF5 Tyler Durden

High-yield energy bond spreads are crashing-er. Up 15bps to 880bps today, these are record wides and massively impact the economics of these firms – no matter how much investors want to ignore it. This is contagiously spreading across the broad high yield and even investment grade credit markets as high yield bond prices crash below the mid-October Bullard lows…

 

HY Energy risk is exploding…

 

And that is contagiously infecting the entire credit complex…

 

Now we will see what BlackRock’s liquidty fears really amount to.

 

Charts: Bloomberg

via Zero Hedge http://ift.tt/1635lxO Tyler Durden

Curious what to expect out of today’s 600-page mega dump by the Senate Intelligence Committee revealing US torture techniques and practices, aka the “torture report”? The the following explainer by the Intercept’s Glenn Greenwald should provide some useful pointers.

Coverage Of The Senate Torture Report

One of the worst myths official Washington and its establishment media have told itself about the torture debate is that the controversy is limited to three cases of waterboarding at Guantánamo and a handful of bad Republican actors. In fact, a wide array of torture techniques were approved at the highest levels of the U.S. Government and then systematically employed in lawless US prisons around the world – at Bagram (including during the Obama presidency), CIA black sites, even to US citizens on US soil. So systematic was the torture regime that a 2008 Senate report concluded that the criminal abuses at Abu Ghraib were the direct result of the torture mentality imposed by official Washington.

American torture was not confined to a handful of aberrational cases or techniques, nor was it the work of rogue CIA agents. It was an officially sanctioned, worldwide regime of torture that had the acquiescence, if not explicit approval, of the top members of both political parties in Congress. It was motivated by far more than interrogation. The evidence for all of this is conclusive and overwhelming. And the American media bears much of the blame, as they refused for years even to use the word “torture” to describe any of this (even as they called these same techniques “torture” when used by American adversaries), a shameful and cowardly abdication that continues literally to this day in many of the most influential outlets.

The Senate Intelligence Committee today will release part of its “torture report.” The report is the by-product of four years of work (2009-2013) and is 6,000 pages long. Only the Executive Summary, roughly 600 pages, will be released today. Even some of that is redacted: the names of CIA agents participating in the torture, countries which agreed to allow CIA black sites, and other details. For months, top Democrats on the Committee warred with the Obama White House due to the latter’s attempts to redact far more vital information than even stalwart CIA ally Dianne Feinstein thought necessary.

None of this has been in any plausible doubt for years. Recall that Gen. Antonio Taguba, who led an official investigation into prisoner abuse, said in 2008: “There is no longer any doubt as to whether the current administration has committed war crimes. The only question that remains to be answered is whether those who ordered the use of torture will be held to account.” Gen. Barry McCaffrey said : “We tortured people unmercifully. We probably murdered dozens of them during the course of that, both the armed forces and the CIA.” Nobody needs this Senate report to demonstrate that the U.S. government became an official squad of torture (with the American public largely on board).

Still, this will be by far the most comprehensive and official account of the War on Terror’s official torture regime. Given the authors – Committee Democrats along with two Maine Senators: Agnus King (I) and Susan Collins (R) – it’s likely to whitewash critical events, including the key, complicit role members of Congress such as Nancy Pelosi played in approving the program (important details of which are still disputed), as well an attempt to insulate the DC political class by stressing how the CIA “misled” elected officials about the program. But the report is certain to lay bare in very stark terms some of the torture methods, including “graphic details about sexual threats” and what Reuters still euphemistically and subserviently calls “other harsh interrogation techniques the CIA meted out to captured militants.”

Important parts of the Obama administration engaged in all sorts of gamesmanship to prevent the report’s release, including a last-minute call from John Kerry to Feinstein in which the Secretary of State warned that release of the report could endanger American lives (a warning affirmed yesterday by the White House) And a vital part of President Obama’s legacy will be his repeated and ultimately successful efforts to shield the torturers from all forms of legal accountability – which, aside from being a brazen breach of America’s treaty obligations, makes deterrence of future American torture almost impossible (Obama did that even in the face of some polls showing pluralities favored criminal investigations of torture).

To see how little accountability there still is for national security state officials, recall that the CIA got caught spying on the Senate Committee and then lying about it, yet John Brennan kept his job as CIA Director (just as James Clapper is still Director of National Intelligence despite getting caught lying about NSA domestic spying). Any decent person, by definition, would react with revulsion to today’s report, but nobody should react with confidence that its release will help prevent future occurrences by a national security state that resides far beyond democratic accountability, let alone the law.

The Intercept will have comprehensive coverage of the report throughout the day. We’ll have full annotations of the report; graphical guides to the key parts; reporting in Washington from Dan Froomkin, who has been covering the report for months, and other reporters; and I’ll be live-blogging key parts of the report and other fallout in this space all day, appearing, in reverse chronological order, underneath these initial observations.

Media Torture Advocates

Col. Morris Davis,  the retired Air Force Colonel who served as the Chief Prosecutor of the Military Commissions at Guantánamo until 2007 when he lost his job for criticizing the tribunal, notes that MSNBC’s Joe Scarborough this morning explicitly defended the torture techniques, arguing: “whatever it takes to keep America safe.” Aside from being the essence of the authoritarian mindset – security über alle – it’s quite striking that major television personalities in the U.S. explicitly justify the use of torture. Is there any other western country where that’s true? After all, The Washington Post hired former Bush speechwriter Marc Theissen as a columnist after he wrote an entire book justifying torture (when used by the U.S.).

The U.S. has led the way in destroying the ostensible western taboo surrounding torture, which is why official torturers go free and torture advocates are featured in almost every major media outlet.

via Zero Hedge http://ift.tt/1635jGc Tyler Durden

Today at 9:30am Eastern, the two key people behind Obamacare will testify under oath before the House Committee on Oversight and Government Reform. One of them is Marilyn Tavenner, the CMS Administrator and the person who was tasked with managing the implementation of Obamacare: a process that was a complete disaster as those who tried to sign up on the healthcare.gov website in late 2013 will recall (and whose overhaul cost over $2 billion).  On the other hand, Jonathan Gruber has recently gained notoriety after a series of videos with him were leaked, in which he bragged that deception and “the stupidity of the American voter” allowed Obama to ram his pet healthcare program into law.

According to Washington Times, “a tea party group said its members will greet Jonathan Gruber, the man at the center of Obamacare’s troubled public image, with T-shirts reading “I’m with Stupid” when he shows up to defend himself Tuesday before what’s likely to be a hostile congressional panel. Republicans call Mr. Gruber, a professor at the Massachusetts Institute of Technology, a key architect of the Affordable Care Act, while Democrats are rushing to put distance between them and their erstwhile star after several rounds of caught-on-tape remarks about the “stupidity of the American voter” and the need to game budget rules to pass Obamacare were made public.”

In short, grab popcorn.

The hearing can be viewed below.

Broadcast live streaming video on Ustream

And while it is doubtful if Congress will actually try to get constructive answers out of the witnesses and will surely pander to political talking points thus assuing high entertainment – if not educational – value throwing mostly fluff questions, here, courtesy of Breitbart, are 15 questions that Congress should ask the MIT professor:

1. Gruber’s role – The White House and Democrats have argued that Gruber was “just an advisor,” “not part of the White House staff,” “a non-legislator,” and “not part of drafting the law.” Gruber has publicly stated the opposite. What was Gruber’s role in initially designing and writing Obamacare and then explaining and selling the proposed law to Congress?

2. Gruber’s interaction with Democrats – Democrats have distanced themselves from Gruber claiming they “never met him” or “don’t know who he is.” What interaction did Gruber have with the president and senior members of the White House and Congress throughout this process? Specifically, did Gruber meet with President Obama in Boston in October last year? (Hat tip to Rich Weinstein)

3. Gruber’s White House meeting with Obama – Gruber described a meeting with the president at the White House, stating, “Now, the problem is, it’s a political nightmare… and people say, ‘No, you can’t tax my benefits.’ So what we did a lot in that room was talk about, well, how could we make this work? And Obama was like, ‘Well, you know’ — I mean, he is really a realistic guy. He is like, ‘Look, I can’t just do this.’ He said: ‘It is just not going to happen politically. The bill will not pass. How do we manage to get there through phases and other things?’ And we talked about it. And he was just very interested in that topic.” What specific solutions did Gruber discuss with the president in response to his comments and concerns in order to get the bill passed?

4. Sebelius’ reliance on Gruber – Former HHS Secretary Sebelius has recently claimed she never personally worked with Gruber. On December 3, 2009, Secretary Sebelius issued a press release with a “New Facts Sheet.” In this one page document, Sebelius references Gruber’s work three times. Are the statements attributed to Gruber “facts” or “assumptions,” and what was his role and interaction with Secretary Sebelius and her staff related to this document?

5. Obamacare master deception strategy – Explain how deception, lack of transparency, and the “stupidity of the American voter” were critical to Obamacare passage.

6. Deception players – Who from the Obama Administration, HHS, or Congress did Gruber discuss this deception, lack of transparency, and exploitation of the “stupidity of the American voter” strategy?

7. Key Obamacare deceptions – Explain each of the specific deceptions included in the law. Some of the more egregious deceptions:

   • You can keep your plan

   • You can keep your doctor

   • The mandate is not a tax

   • Healthy people are not subsidizing sick people

   • Companies will not cancel employer plans, thereby throwing many people onto the exchanges

8. Gruber and the CBO – Explain his involvement in development of the CBO model in 2007 that was used to score Obamacare, the similarities to his own micro-simulation model, and what information did he provide to CBO that as Senator Baucus said the CBO “otherwise does not have” to score Obamacare?

9. Gruber’s changed assumptions since law passed – Gruber has stated that he created a summary of his key assumptions for his micro-simulation model that he uses to run scenarios. What assumptions have materially changes since he ran his model for evaluating Obamacare in 2009?

10. Gruber’s sole source contract with HHS – On February 25, 2009, HHS announced it “intends to negotiate with Jonathan Gruber, Ph.D. on a sole sources basis for technical assistance in evaluating options for national healthcare reform. The basis for restricting competition is the authority 13.106-1(b) because only one source is reasonably available to satisfy agency requirements.” Why was he the only person that could provide the technical assistance? Was part of the reason that Gruber had worked with Peter Orszag and the CBO to develop the CBO model in 2007?

11. Why would a state establish an exchange? – Gruber disavowed his comments in the two January 2012 videotape that only states that establish exchange are entitled to receive tax credits. In the video tapes, Gruber explains how tax credits are a significant incentive for states to establish an exchange. If tax credits were not an incentive because all states received tax credits, what incentive was there for a state to establish an exchange?

12. Any evidence of another state incentive – Gruber had written at least 3 publications prior to January 2012 that state tax credits are for state-established exchanges. In addition, his colleague and the highly respected professor who was a guest at the Obamacare signing ceremony, Timothy Jost, published two papers in 2009 explaining the same exact tax credit incentive as Gruber did in the videos. Is Gruber aware of any publication or video tape of either him or Professor Jost where they provide any other logic or incentive for a state to establish its own exchange?

13. Gruber and the Supreme Court – Gruber should explain his involvement and conversations related to arguing to the Supreme Court that the mandate was a tax after, as he claimed on a video tape in drafting the law, the mandate was specifically not labeled as a tax.

14. Why are state exchanges important? – In designing the law, why was it important that states establish exchanges instead of the Federal government running the exchange for all the states?

15. Subcontracting and other compensation – Media publications have listed approximately $5.9 million in contracts with Federal and state organizations. In additions to these agreements, what other arrangements and how much did he earn from arrangements such as his subcontracting agreement with Wakely Consulting Group? (a senior partner at Wakely Group is a long time colleague of Gruber’s and ran the Massachusetts exchange)

There is one critical question Congress should ask Administrator Tavenner:

1. Why no tax credit calculator for HealthCare.gov? – In order for an exchange website to offer tax credits, it must have a tax credit calculator that allows individuals to view the actual cost of their coverage after tax credits have been applied to their premiums. Official documents show that while HHS moved quickly after the ACA’s enactment to help state governments make tax credits available through state-based exchanges, for nearly two years, it developed its HealthCare.gov website without any effort to offer tax credits on the federal exchange. If the Obama administration and HHS believed the law provides tax credits for all exchanges including federally-facilitated exchanges, why did the original contract to build HealthCare.gov not require CGI to build a tax credit calculator?

via Zero Hedge http://ift.tt/1zJARty Tyler Durden