Tag: finance

Is McCain Hijacking Trump’s Foreign Policy?

Authored by Patrick Buchanan via Buchanan.org,

“The senator from Kentucky,” said John McCain, speaking of his colleague Rand Paul, “is working for Vladimir Putin … and I do not say that lightly.”

What did Sen. Paul do to deserve being called a hireling of Vladimir Putin?

He declined to support McCain’s call for a unanimous Senate vote to bring Montenegro into NATO as the 29th member of a Cold War alliance President Trump has called “obsolete.”

Bordered by Croatia, Bosnia-Herzegovina, Serbia, Kosovo and Albania, tiny Montenegro has a population roughly that of D.C., and sits on the western coast of the most volatile peninsula in Europe.

What strategic benefit would accrue from having Montenegro as an ally that would justify the risk of our having to go to war should some neighbor breach Montenegro’s borders?

Historically, the Balkans have been an incubator of war. In the 19th century, Otto van Bismarck predicted that when the Great War came, it would come out of “some damn fool thing in the Balkans.” And so it did when the Austrian archduke was assassinated in Sarajevo June 28, 1914 by Serbian ethnonationalist Gavrilo Princip.

Aflame with ethnic, civil and sectarian war in the 1990s, the western Balkans are again in political turmoil. Milo Djukanovic, the longtime Montenegrin prime minister who resigned on election day in October, claims that he was targeted for assassination by Russia to prevent Montenegro’s accession to NATO.

Russia denies it. But on the Senate floor, McCain raged at Rand Paul: “You are achieving the objectives of Vladimir Putin … trying to dismember this small country which has already been the subject of an attempted coup.”

But if Montenegro, awash in corruption and crime, is on the verge of an uprising or coup, why would the U.S. issue a war guarantee that could vault us into a confrontation with Russia — without a full Senate debate?

The vote that needs explaining here is not Rand Paul’s.

It is the votes of those senators who are handing out U.S.-NATO war guarantees to countries most Americans could not find on a map.

Is no one besides Sen. Paul asking the relevant questions here?

What vital U.S. interest is imperiled in who comes to power in Podgorica, Montenegro? Why cannot Europe handle this problem in its own back yard?

Has President Trump given McCain, who wanted President Bush to intervene in a Russia-Georgia war — over South Ossetia! — carte blanche to hand out war guarantees to unstable Balkan states?

Did Trump approve the expansion of NATO into all the successor states born of the bloody breakup of Yugoslavia?

Or is McCain hijacking U.S. foreign policy on NATO and Russia?

President Trump should tell the Senate: No more admissions to NATO, no more U.S. war guarantees, unless I have recommended or approved them. Foreign policy is made in the White House, not on the Senate floor.

Indeed, what happened to the foreign policy America voted for — rapprochement with Russia, an end to U.S. wars in the Middle East, and having rich allies share more of the cost of their own defense?

It is U.S., not NATO defense spending that is rising to more than $50 billion this year. And today we learn the Pentagon has drawn up plans for the insertion of 1,000 more U.S. troops into Syria. While the ISIS caliphate seems doomed, this six-year Syrian war is far from over.

An al-Qaida subsidiary, the Nusra Front, has become the most formidable rebel fighting group. Syria’s army, with the backing of Russia, Iran, Hezbollah and Shiite militias from across the Middle East, has carved out most of the territory it needs.

The Turkish army is now in Syria, beside its rebel allies. Their main enemy: Syria’s Kurds, who are America’s allies.

From our longest war, Afghanistan, comes word from U.S. Gen. John Nicholson that we and our Afghan allies are in a “stalemate” with the Taliban, and he will need a “few thousand” more U.S. troops — to augment the 8,500 President Obama left behind when he left office.

Some 5,000 U.S. troops are in Iraq, helping to liberate Mosul from ISIS. In Kabul, Baghdad and Damascus, terrorist bombings are a weekly, if not a daily, occurrence.

Then there is the U.S. troop buildup in Poland and the Baltic, the U.S. deployment of a missile defense to South Korea after multiple missile tests in the North, and Russia and China talking of upgrading their nuclear arsenals to counter U.S. missile defenses in Poland, Romania and South Korea.

In and around the waters of the Persian Gulf, United States warships are harassed by Iranian patrol boats, as Tehran test-fires anti-ship and anti-aircraft missiles to send the Americans a message: Attack us and it will not be a cakewalk war.

With the death of Communism, the end of the Cold War, and the collapse of the Bushite New World Order, America needs a new grand strategy, built upon the solid foundation of America First.

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‘Anonymous’ Joins Hacker Crusade To Steal Millions From Global Central Banks

Roughly a year ago we wrote about perhaps the most notable bank heist in history in which a group of hackers used Swift, the interbank messaging system, to steal $81 million from the Central Bank of Bangladesh.  Here’s our recap: 

For those who missed the story, you can review it in all its James Bond-ish glory in the four posts linked below, but here is a brief summary of what happened to the $81 million: 1) it was transferred to four accounts at the Jupiter Street, Makati City, branch of Rizal Commercial Banking Corp (RCBC) in the Philippines, 2) $470,000 in cash went into the branch manager’s trunk and the rest went to a possibly forged (but possibly not) account registered to one William Go, 3) the money was transferred to an FX broker called Philrem, 4) $50 million was split between two casinos and the remaining $31 was delivered to a “Weikang Xu” in cash.

 

From there, the trail goes cold.

But Bangladesh isn’t the only country whose Central Bank has been targeted by a growing number of hackers seeking to score a quick, and massive, loot.  As Bloomberg notes, hacks on global financial systems soared in 2016 and claimed Russia, Poland, Uruguay and Mexico, just to name a few, as victims. 

Over the course of last year, hackers looted up to $21 million from accounts opened with the Bank of Russia.

 

Poland’s financial regulator was targeted in January by a suspected “watering hole” attack, where hackers target an often-used website, according to research from BAE Systems. In this instance, the hack originated from the website of Polish Financial Supervision Authority (KNF), where code was planted that would serve malware to certain visitors of the site. The malicious code was selectively targeted at financial institutions, and multiple banks were compromised via their users simply browsing the KNF website.

 

Similar code was also believed to be present on the website of the state-owned Banco de la República Oriental del Uruguay, and the National Banking and Stock Commission of Mexico in late 2016, according to analysis from BAE Systems and U.S. software company Symantec Corp.

Anonymous

 

Now, the hacking collective “Anonymous,” known for its activism against big corporations, security forces, and governments, has decided it wants to get in on the massive central bank scores and is actively recruiting new hackers that can assist in the effort.

While the people wouldn’t say which banks are being targeted, they said the group has been busy recruiting new hackers to aid it in its forays, and renewed its attack against a number of central banks in February.

 

The group last year attacked at least eight monetary authorities, including the Dutch Central Bank, the Bank of Greece, and the Bank of Mexico, the two people said. In a change of tack, it is also considering plans to sell on any confidential information it obtains, according to one of the people.

 

The actions by non-state hacking and hacktivist groups such as Anonymous “are a wake-up call that should alert us to the critical weaknesses of global financial systems,” said Stefano Zanero, a professor of computer security at Italian university Politecnico di Milano.

Janet Yellen recently warned in testimony before the congressional Joint Economic Committee in November that a successful cyber-security attack on the U.S. banking system is “one of the most significant risks our country faces.”  In fact, central banks all around the world are spending millions on cybersecurity experts and even buying startup companies to avoid being the next embarrassing victim of a multi-million dollar cyber heist. 

In response, central banks and related agencies have been busy attempting to stem the increasing number of attacks. In June Swift hired BAE Systems and U.K. cybersecurity adviser NCC Group Plc in a bid to improve its security defenses. BAE has since helped Swift analyze whether it needs to flag potential issues to correspondent banks.

 

The Bank of England is even scooping up startups to help it battle online threats. It is currently running an accelerator, launched in June 2016, and is to start working with Anomali in order to “hunt and investigate cyber security intelligence data in a highly automated fashion,” according to a case study published in February by the Bank.

Of course, try as they might, we suspect the world’s bureaucratic central banks may be ill-equipped for a battle against an army of anonymous, international hackers fed up with their destructive policies aimed at continously inflating assets bubbles which serve only to help the rich get richer while enslaving the masses…

Image result for project mayhem

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DOJ Delivers Trump Wiretap Documents To Congress, Statement Due Shortly

The DoJ just delivered documents to congressional committees responding to their request for information that could shed light on President Donald Trump’s claims that former President Barack Obama ordered U.S. agencies to spy on him. Reuters reports that a congressional official, who spoke on condition of anonymity, said the House Intelligence Committee was examining the documents and might issue a public statement about them later on Friday.

As The Hill reports, it’s unclear what’s in the documents, which CNN reported separately had also been delivered to the Senate Intelligence Committee, though that report could not be immediately confirmed.

Reuters reports a ‘government source’ an initial examination of the material turned over by the Justice Department indicates that it contains no evidence to confirm Trump’s claims.

Leaders of both the House and Senate intelligence committees, including from Trump’s Republican Party, have said they have found no evidence to substantiate Trump’s claims that Obama ordered U.S. agencies to spy on Trump or his entourage. The White House has publicly offered no proof of the allegation. On Monday, the House panel sent the Justice Department a letter asking for copies of any court orders related to Trump or his associates which might have been issued last year under an electronic surveillance law or a wide-ranging anti-crime statute.

White House press secretary Sean Spicer has sought to clarify the claims, saying that Trump put the wiretapping accusation “in quotes” and was more broadly referring to surveillance activities by the Obama administration.

But, The Hill continues, Spicer also said that Trump “stands by” his initial tweets on the subject, and Trump on Friday joked about the wiretapping claims during a press conference with German Chancellor Angela Merkel.

The House Intelligence Committee will hold an open hearing on Russian interference in the election on Monday, where questions about Trump’s claims are sure to be raised. Lawmakers will have the opportunity to press FBI Director James Comey on the issue.

One way or another, we suspect speculation about what the documets contain will quickly become the news-cycle narrative for the weekend.

Updates to follow…

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Weekend Reading: Just Buy Everything

Authored by Lance Roberts via RealInvestmentAdvice.com,

On Wednesday, as I discussed yesterday, the Fed hiked rates and despite the fact that hiking interest rates further tightens monetary policy, thereby reducing liquidity to the markets, the markets rallied anyway.

With the hopes of accelerated earnings recovery being muted by falling oil prices, higher borrowing costs, and a strong dollar, investors seem willing to forgo the basic fundamentals of investing to chase an already extended and aging bull market cycle.

This was noted yesterday in a note from Goldman’s Jan Hatzius, the chief economist warns that the market is over-interpreting the Fed’s statement, and Yellen’s presser, and cautions that it was not meant to be the “dovish surprise” the market took it to be.

“Surprisingly, financial markets took the meeting as a large dovish surprise—the third-largest at an FOMC meeting since 2000 outside the financial crisis, based on the co-movement of different asset prices.

 

The committee may have worried that a rate hike—especially a rate hike that was not priced in the markets or predicted by most forecasters as recently as three weeks ago—might lead to a large adverse reaction on the day, and wanted to avoid such an outcome by erring slightly on the dovish side. But we feel quite confident that they were not aiming for a large easing in financial conditions. After all, the primary point of hiking rates is to tighten financial conditions, perhaps not suddenly but at least gradually over time. And even before today’s meeting, at least our own FCI was already fairly close to the easiest levels of the past two years and this was likely one reason why the committee decided to go for another hike just three months after the last one.”

He’s right. The Fed, which is now tightening financial conditions (which should/will push asset prices lower), got the exact opposite result as everything rose Wednesday from stocks, to bonds, to gold.

In other words, market participates took the rate hike as another reason to “just buy everything.” 

Of course, with bullish trends still very much in place, it has been, and remains, very challenging to dispute that point.

Just realize, eventually the mantra of “just buy everything” from overly complacent bullish investors, will change to “just sell everything.” 

Of course, just understanding that particular point is just winning the battle.

Recognizing, and acting, on the change is what “Wins the war.”

Just some things I am thinking about this weekend as I catch up on my reading.

Trump/Fed/Economy

Markets

Financial Planning/Retirement

Research / Interesting Reads

“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” – Henry Ford

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Why The Fate Of The World Economy Is In The Hands Of China’s Housing Bubble

A couple of research reports released overnight by Deutsche Bank and Bank of America, respectively, come to a sobering conclusion: the fate of the global economy may be in the hands of the Chinese housing bubble. As a reminder, China is a serial bubble inflator courtesy of a closed (capital account) economy, and nearly $30 trillion in bank deposits which slosh from one asset class to another, be it the stock market, bitcoin, commodities, farm animals or – most often – housing.

As all China watchers knows, and as DB confirms, the root cause of this bubble is “excessively loose monetary policy set to achieve growth above its potential.” Furthermore, while the most recent housing bubble, the third in a row, appears to have recently popped as annual home price growth declined in January for the first time after 19 months of continuous acceleration, the question is how hard will Beijing push to prevent the same hard landing that took place in late 2014 when the bursting of the second housing bubble led to substantial slowdown in China, and sent rippled effects around the globe. 

 

So why is it so important for China to periodically and consistently reflate this bubble? The answer is simple: a gargantuan wealth effect, to the tune of 24 trillion yuan, or roughly $3.5 trillion.

As Deutsche’s Zhiewi Zhang writes when discussing the macro and market consequences of the Chinese bubble, it is nothing more (or less) than “a massive wealth effect”:

We estimate that in 2016 the rise of property price boosted household wealth in 37 tier 1 and tier 2 cities by RMB24 trillion, almost twice their total disposable income of RMB12.9 trillion (fig.11).

Such effect even spread to many tier 3 cities (Figure 13).

And, as Deutsche further points out, the (rather fleeting) wealth effect “may be helping to sustain consumption in China despite slowing income growth. A decline of property price would obviously have a large negative impact.” And not just in China, but around the globe, as this incremental $3+ trillion in demand provide a material boost to not only China’s direct trading partners, but set the economic pulse around the globe via various “soft” sentiment surveys, via transposition of the “EM to DM” growth narrative, as well as via direct purchases of offshore assets by capital controls-circumventing Chinese residents.

In fact, as the German bank explicitly states, the “property sector has become the critical pillar for fiscal revenue and the economy.” A sector which as both the Chinese government, and DB, call a bubble.

But why would the government tolerate the bubble – knowing its bursting could have dire consequences on the economy if not contained – instead of seeking to deflate it gradually? There are three reasons:

  • The property and construction sectors accounted for 33% and 15% of local government tax revenue growth between 2010 and 2015. They contributed 43% of local government tax revenue in 2015,  compared to 11% from manufacturing (Figure C3). Besides taxes, local governments also heavily rely on land sales to finance infrastructure projects.

  • Banks, developers, urban property owners, and government all benefited tremendously from the property sector so far. This makes it difficult for the government to tighten monetary policy or roll out straightforward measures such as property tax to contain the bubble. The reluctance to prick the bubble only makes it larger.
  • The government may have the confidence that they can avoid a property bubble burst. It does appear that China has a stronger control over property prices than other countries, because it has a closed capital account, high saving rate, low CPI inflation, high level of reserves, a current account surplus, monopolized land supply, and a financial system largely controlled by the government. Some may argue “why can’t Beijing and Shanghai become Hong Kong?”

So the question the is simple: with the fate of the domestic, and therefore global, economy in the hands of China’s housing sector, what happens next. The answer is unclear, however as DB warns, “property bubble bursts in other countries were often preceded by higher interest rates.” And in what direction is the world headed? That’s right: one where gradually every central bank is starting to tighten and raise interest rates.  As DB further adds, “the chance of rate hikes in China rises in 2018 as we expect higher inflation in China and six more rate hikes in the US over 2017/18. In the longer term, unfavorable demographic trend and slowdown of urbanization are the ultimate constraints.“

So while it is clearly Beijing’s desire to keep the housing bubble as inflated as possible, it may not have a choice absent further, much looser monetary conditions. The reason for that is as Bank of America’s David Cui writes, “China’s housing market is among the least affordable globally. Although this doesn’t necessarily mean a sharp price correction anytime soon, it leaves the government with less scope than most others in our view to manage housing price, should interest rate jump or income growth slow. In addition, we believe that high asset prices, including housing price, is one of the main drivers of capital outflow.“

Some further thoughts on what may be the world’s least affordable housing market:

Many use the housing-value to GDP ratio to gauge whether a country’s housing market is reasonably priced. We believe that the ratio of housing value over household income is more telling – after all, households spend their income buying houses, not businesses nor the government. Based on this ratio, China’s is the second most expensive market among the countries that we track, all with a reputation of excessive housing price at various times (Chart 1). Other than the high housing price (relative to income), another major contributor to China’s high ratio is a low share of household income in GDP (which, by the way, goes to the heart of China’s imbalanced growth problem in our view).

 

Does this unprecedented unaffordability mean that a crash is imminent? According to Cui, China’s high ratio currently doesn’t necessarily mean that housing price will drop sharply anytime soon – Japan’s and Ireland’s had reached far higher levels before theirs corrected while Australia’s, Korea’s, and indeed, China’s have stayed at high levels for years without any major price correction so far. However, a few factors could make housing price in China over the next few years more vulnerable than most, including financial system risk posed by a rapid rise of leverage economy-wide, and a lack of exchange rate flexibility.

A far more immediate problem as a result of China’s housing bubble may be the acceleration of Yuan outflows.  According to Cui, a major driver of China’s capital outflow is high asset prices.

In another word, the local rich may prefer NY condos to Shanghai apartments for better value, for example. From this perspective, for the outflow pressure to ease, either housing price in Rmb terms has to decline or Rmb devalues. This assumes that the government cannot control capital outflow effectively in the long run, a reasonable assumption in our view given how open the Chinese economy is.

How will the government react? BofA predicts that “if it comes down to it, we expect the government to choose Rmb devaluation over asset price deflation” aka a housing hard landing. ” Arguably the biggest driver behind high asset prices in China is leverage in our opinion. As a result, any major asset price decline may quickly trigger a debt deflation spiral and financial system instability.”

The take home summary: keep a close eye on how Beijing manages to deflate the existing bubble: if it fails to be aggressive enough, home prices will once again spike, leading to an even more precarious bubble. If it is too aggressive, a hard landing is in store, coupled with what a crash in the country’s financial system, where the bulk of the banks’ $35 trillion in assets is collateralized by housing values. While such a crash may not necessarily lead to a catastrophe for China, where the government ultimately backstops all the banks, the deflationary wave spread around the globe from a housing crash would be dire.

Which is why those who are looking for key inflection points to determine the future trajectory of the global economy, in addition to the global (read Chinese) credit impulse…

… we suggest keeping a close eye on what happens with Chinese housing, which has become a – if not the – top variable for the fate of the both the great inflation-deflation debate, as well as the overall fate of the world economy.

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Stocks Sink On ‘Quad Witch’ As Dollar Suffers Worst Week In 8 Months

One. Big. Squeeze…

 

It was quite a week for 'uncertainty' as Europe's VIX crashed to record lows, and FX and Rate vols plunged after the Fed move and Dutch elections…

 

Small Caps were the week's biggest winners (and Trannies the losers)… The Dow clung to the week's gains

 

Financials had the 2nd worst week of the year – erasing the Trump Congress speech ramp

 

Heading into the quad witch close VIX was well bid (after the panic selling around the open), busting the plan to break The Dow back above 21,000…

 

Post-Fed, Gold is the biggest winner…

 

Notably, after the worst week in 13 months last week, HYG managed the best week in 3 months, boucing off the 200DMA again…

 

Today's record low inflation expectations sent bond yields and the dollar tumbling to post-Fed lows…

 

Some context for these moves… The Dollar is back near post-election lows and the 30Y yield stumbled once again at 3.20%

 

On the week 2s10s notably flattened…

 

This was the Dollar's worst week in 8 months…And AUD, JPY, and Cable strength dragged on The Dollar Index…

 

The USD is down over 3% in Q1 and is unchanged since March 2015…

 

The Mexican Peso surged this week, erasing the entire post-Trump decline…

 

With the debt ceiling deadline now passed, we note that USA sovereign risk has not moved yet, but Russia (which is junk rated but saw a positive outlook upgrade today) is now trading tighter (less risky) than investment grade Italy…

 

This was gold's best week in the last six weeks… (silver also bounced after 2 down weeks)…

 

Gold and Silver closed above key technical levels…

 

Finally, this…

 

And here's why Nasdaq hit a new record high…

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“Stronger Together” – George Soros Urges Americans To Fight Back Against Trump “Hate”

Amid numerous nations openly investigating his actions (most recently US Senators), billionaire 'philanthropist' and all round good-guy George Soros has penned another op-ed to explain why President Trump is evil for upholding basic immigration laws, and why his 'hate' speak must not be tolerated…

When Hate Surges

Authored by George Soros via The New York Times,

President Trump has wasted no time in cracking down on immigration. He pledged to build a wall, hire 15,000 new Immigration and Customs Enforcement and Border Patrol agents and speedily deport millions of undocumented immigrants. He justified these actions by claiming that immigrants regularly flout the “rule of law and pose a threat.” In his first speech to Congress, he directed the Department of Homeland Security to create a new office — Victims of Immigration Crime Engagement, or Voice — dedicated to helping victims of crimes perpetrated by “removable aliens.”

I am an immigrant and an American citizen, and, as a philanthropist, have supported migrants all over the world for more than 30 years. Based on my experience and the facts, the president’s approach to immigrants is just wrong — and a new round of court injunctions against Mr. Trump’s latest proposed travel ban on people from six Muslim-majority countries suggests many in the federal judiciary agree. It does nothing to make America safer, while whipping up emotions against immigrants that have translated into an alarming surge in hate incidents all across our nation. My heart goes out to the victims of violence, whatever the source. But in the name of protecting the population from a relatively minor source of concern, he is branding all immigrants as criminals.

Contrary to Mr. Trump’s claims, immigrants commit significantly less crime than native-born citizens. This has been borne out in study after study, using a wide range of methodologies, dating back decades. According to the nonpartisan American Immigration Council, the percentage of the population that is foreign-born grew to 13.1 percent from 7.9 percent between 1990 and 2013. F.B.I. data shows that the violent crime rate dropped 48 percent during that time and today remains near historic lows. A recent study by the Journal on Ethnicity in Criminal Justice shows that immigrants actually drive down crime rates in the neighborhoods where they live.

But targeting immigrants and minorities with false and prejudicial rhetoric, as Mr. Trump has done during the campaign and in the early weeks of his presidency, has spurred a surge in hate acts against them. The Southern Poverty Law Center found that hate incidents reported in the first few weeks following Mr. Trump’s victory were at levels normally seen over a six-month period. No community appears safe from this rash of hate — with reports like school bullying against Muslim children, stories of Latinos being harassed on the street and told to “go back to your country,” attacks on blacks and gays, and the desecration of Jewish cemeteries. This is a country that prides itself on neighbors looking out for one another. In Donald Trump’s America, we are increasingly at one another’s throats.

As hate incidents surged after the election last fall, I announced a $10 million investment to provide legal and social services to victims of hate crimes, to encourage local organizations across the country to do the same and to propose improvements and new ideas. This week we opened our Hate Incident Database to monitor the scope and depth of hate incidents across the country.

Having survived the Nazi persecution of Jews in Hungary, I escaped from Soviet occupation at age 17 and made my way first to Britain and then to America. This is not the America that attracted me. I have seen the damage done when societies succumb to the fear of the “other.” And I will do all I can to help preserve the openness, inclusiveness and diversity that represent our greatest strength.

Demonizing immigrants weakens our country. Fighting against hate crimes makes us grow stronger together.

*  *  *

What an apt way to end – with Hillary's tagline!! Rise up America, and fight those who disagree with your opinion… so that we can grow stronger together?

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Why Is Goldman On A Buying Spree For Delinquent Mortgages

Last year Goldman Sachs entered into a settlement with federal and state governments over its role in packaging and selling toxic mortgage-backed securities in the housing meltdown to unsuspecting buyers while subsequently turning around and shorting those very same securities.  As part of the settlement, Goldman agreed to provide $1.8 billion in homeowner debt relief to delinquent U.S. borrowers.

The only problem with the settlement is that Goldman doesn’t actually own any mortgage debt, they prefer to package it up into pretty little bundles, slap a AAA rating on it and sell it to pension funds for a fee instead.

Of course, that’s not a problem for Wall Street’s vampire squid because they’ve found a whole other way to satisfy the entire $1.8 billion settlement without funding a single penny of that obligation in cash, in fact, they’re making money on the scheme. 

So, how does it work?  Well, the first step is to buy up billions of dollars worth of non-performing loans (NPLs) at massive discounts of up to 50 cents on the dollar.  Then, you negotiate mortgage modifications with borrowers that reduces their principle balance, of course by less than Goldman’s initial discount on the original purchase, and allows them to start making payments again.  That principle foregiveness then gets counted towards Goldman’s $1.8 billion mortgage relief obligation even though it actually cost them absolutely nothing because they acquired the debt at an even larger discount.  Finally, and this is the real beauty of the scheme, when the loans are performing again they can be packaged up and resold as AAA paper once again…

Here’s a quick example of how it might work on an individual mortgage:

Lets assume a borrow has a $200,000 mortgage outstanding but isn’t making payments.  Goldman then comes along and buys that mortgage for $100,000 from Fannie Mae.  Goldman then goes to the borrower and offers to reduce his mortgage balance to $150,000 if, in return, he’ll agree to start making payments again.  That $50,000 debt reduction then gets applied to Goldman’s $1.8 billion settlement obligation. And the coup de gras, once the loan is performing again, Goldman can sell it for $150,000, thus pocketing a $50,000 cash profit plus settling $50,000 of their obligation to various government entities.

GS

 

As the Wall Street Journal notes today, to our great ‘shock’ nonetheless, Goldman has suddenly become the largest buyer of Fannie Mae’s NPLs, having purchased $5.7 billion worth of unpaid loans over the past several months.

Over the past year-and-a-half, the Wall Street giant has become the largest buyer of severely delinquent home loans from mortgage giant Fannie Mae. The firm has acquired nearly two-thirds of $9.6 billion in loans the agency has auctioned, representing unpaid loan balances of $5.7 billion, a Wall Street Journal review of government records shows.

 

In all, Goldman has spent roughly $4.5 billion on some 26,000 Fannie-owned loans, according to the government records. It has also been buying mortgages, in smaller size, from private sellers and Freddie Mac, Fannie’s sibling, according to county records, government filings and traders.

 

On Tuesday Goldman won the majority of loans at Fannie’s latest auction, its largest to date. The bank bought about 8,000 loans with unpaid balances of $1.4 billion.

 

Goldman has paid between 50 and 90 cents on the dollar for the loans, according to Fannie Mae records.

Meanwhile, because Goldman is getting credit toward fulfilling the terms of its settlement, it can afford to pay more for delinquent loans than other competing bidders, which essentially means they’ve cornered an entire market.

Just another beautiful Obama-era ‘deal’ for U.S. taxpayers…Obama gets to publicly take credit for ‘punishing’ the evil vampire squid of wall street all while privately tossing them a sweetheart deal…seems that Hillary isn’t the only politician with conflicting ‘public’ and ‘private’ positions on key issues.

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A Bad Week (And Getting Badder Bigly Fast)

Authored by Howard Kunstler via Kunstler.com,

Well, of course they bugged Trump Tower. Why wouldn’t they? Trump’s big blunder du jour is that he tweeted “wiretapped,” like some hapless sap out of a 1950s I Was a Spy for the FBI movie. (I know people who still say “ice box,” too.) So he left himself – or rather poor Sean Spicer – open for a week of legalistic pettifogging by reporters acting as litigators for the Deep State’s intel corps.

Anyway, Wikileaks “Vault 7” document release earlier in the month made it clear that US intel has the ability to cover and confuse the tracks of any entity —including especially US intel itself — that ventures to penetrate any supposedly private or secure realm. And, by the way, that probably settles the matter of who “they” are. Whatever statutory restraints once existed against CIA spying on American citizens is long gone by the boards.

You might suppose, too, that the combined forces of Hillary and Obama, along with the still-entrenched Democratic establishment, would have tried through late 2016 to stop The Menace of Trump at all costs. Somebody had done them dirty in funneling the DNC and Podesta emails to Wikileaks, and it was imperative to fight back — especially with FBI director James Comey (a Republican, after all), going all rogue on Mrs. Clinton. Hence, the manufactured Russia-did-it story that has gotten more mileage than any political hallucination since Senator Joe McCarthy, at his height of influence, played the newspapers like a whole orchestra of flugelhorns.

It’s hard to see how Trump might ever establish the truth of this matter. One of the strange features of these internecine wars is that the Department of Justice — as far as we know — isn’t deposing scores of operations people from the myriad agencies under the NSA umbrella to establish who’s been doing what. Anyway, there’s enough loose scuttlebutt around Washington that Trump might have a pretty good idea of who at the various agencies hates his guts, and is working against him, and one wonders why he doesn’t just fire a bunch of them. Perhaps that’s yet to come.

But it also looks a bit as though the Golden Golem of Re-Greatification has wandered into a political minefield so dense with booby traps that he’s already out of moves. First there’s the debt ceiling problem — which has so far received almost no attention from the Kardashianized collective news media. As David Stockman has pointed out on his blog, the US Treasury amassed a “war chest” of nearly half a trillion dollars last fall (via various book-keeping shenanigans) in expectation that President Hillary would need it to ride out some fiscal bad weather early in her reign.

Then, the truly inconceivable happened and Hillary won bigly in the wrong states and not bigly enough in the right ones, and, well…. Immediately, with Trump ascendant, the Treasury and its handmaidens at the Federal Reserve engineered a rapid burn-through of the war chest at a rate of about $90-billion a month since November, so that now there remains only about a month’s worth of walking-around money to run the US Government. With the old debt ceiling truce expired, congress would have to resolve to raise it, to legally enable the Treasury to resume its massive borrowing operations, or else the government won’t be able to pay invoices or issue pension checks or meet any obligations. It could even default on its “no risk” bonds.

Those dangers are theoretical for the moment, especially since there is always more accounting fraud to resort to when all else fails. But the longer a debt ceiling stalemate goes on in congress, the more trapped President Trump will be. The cherry on top is the Federal Reserve’s move to raise interest rates the same day the debt ceiling truce expired. That will thunder through the system, making many loans more expensive to repay, dampening the real estate markets (at a time when commercial real estate is already tanking), and draining all kinds of other mojo (however falsely engineered) from the Potemkin economy.

As if being trapped in a political minefield isn’t bad enough, the remaining safe patch Trump is stranded on turns out to be the LaBrea Tar Pit of health care reform. At this point, the crusade is doing worse than going nowhere — it’s getting sucked into the primordial bitumen where the mastodons and camelops sleep.

via http://ift.tt/2nwldWJ Tyler Durden

Is Donald Trump About to Massively Expand America’s Imperial Wars?

Equal and exact justice to all men, of whatever state or persuasion, religious or political; peace, commerce, and honest friendship with all nations, entangling alliances with none.

– Thomas Jefferson’s Inaugural Address, March 4, 1801

Many people voted for Donald Trump based on his pledge of “America First.” The idea behind this partly relates to the very legitimate concern that the U.S. Empire and its military-industrial-contractor benefactors have been squandering an enormous amount of treasure and tax money on foreign adventurism, funds which could be of much greater use at home helping struggling Americans, fixing our broken economy and infrastructure. I’m starting to become increasingly concerned that rather than winding down America’s foreign adventures, Trump and his team are preparing to expand them.

The always excellent Robert Parry at Consortium News got me thinking about this with his recent post. Here are a few excerpts:

The Kagan family, America’s neoconservative aristocracy, has reemerged having recovered from the letdown over not gaining its expected influence from the election of Hillary Clinton and from its loss of official power at the start of the Trump presidency.

Back pontificating on prominent op-ed pages, the Family Kagan now is pushing for an expanded U.S. military invasion of Syria and baiting Republicans for not joining more enthusiastically in the anti-Russian witch hunt over Moscow’s alleged help in electing Donald Trump.

In a Washington Post op-ed on March 7, Robert Kagan, a co-founder of the Project for the New American Century and a key architect of the Iraq War, jabbed at Republicans for serving as “Russia’s accomplices after the fact” by not investigating more aggressively.

Then, Frederick Kagan, director of the Critical Threats Project at the neocon American Enterprise Institute, and his wife, Kimberly Kagan, president of her own think tank, Institute for the Study of War, touted the idea of a bigger U.S. invasion of Syria in a Wall Street Journal op-ed on March 15.

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