Archive for the ‘Financial’ Category
Banks’ Self-Dealing Super-Charged Financial Crisis
Over the last two years of the housing bubble, Wall Street bankers perpetrated one of the greatest episodes of self-dealing in financial history
Faced with increasing difficulty in selling the mortgage-backed securities that had been among their most lucrative products, the banks hit on a solution that preserved their quarterly earnings and huge bonuses:
They created fake demand.
A ProPublica analysis shows for the first time the extent to which banks — primarily Merrill Lynch, but also Citigroup, UBS and others — bought their own products and cranked up an assembly line that otherwise should have flagged.
The products they were buying and selling were at the heart of the 2008 meltdown — collections of mortgage bonds known as collateralized debt obligations, or CDOs. Read the rest of this entry »
How to retire wealth on PEI
Four simple steps to getting the most out of your life on an Island
Panmure Island beach, PEI
Everyone wants to get rich and we know how. It’s simple. Bank these PEI beach days. Add to that formula three epigrams: 1) abstinence builds empires, 2) don’t keep up with the Jones and 3) the taxman cometh.
Anyone can enjoy their life in one of Canada’s prettiest provinces.
Bank PEI beach days
It costs nothing to spend time on some of the best beaches in North America when you are on PEI. We have great beaches, most of them free and within 30 to 60 minutes of the city. Every day you take your family to a PEI beach you have saved almost $2,800 dollars. Read the rest of this entry »
Pump and dump stock schemes
Promoter in Rahim Jaffer affair accused of common stock fraud scheme
Pump and Dump stock schemes are as old as time itself. More recently pump and dump came into the public view again in the “Jaffer Affair“. Rahim Jaffir’s business partner was said to be a “pump and dump” artist.
The scam works by taking a penny stock that has lots of stock in the market float but little demand. Or it might be an initial public offering where the promoters and investment bankers have received free shares they want to unload on the unsuspecting public.
Stock traders and strippers
Why panic spreads through the stock market
Lunch at the strip club
The sleep deprived, drug and adrenalin fueled stock market is about to turn from greed to fear over the Greek and EU debt crisis. Things could get ugly very quickly. Yesterday the Dow Jones dropped 900 points before recovering.
When I was living in Toronto in the 1990s, the Financial Post profiled stock brokers and traders during the dot.com boom. The report said many of them used drugs like cocaine to keep up their energy level.
Stock market types from Bay Street would descend on the Zanzibar strip club just up the street from the stock exchange. Lunch with naked dancers got their adrenalin pumped up to make it through the afternoon.
Stock traders also worked long exhausting hours, many drinking their evenings away in bars searching for market rumors and relief from the stress.
Having met traders in Toronto, it made sense. They were a sleep deprived, nervous bunch constantly switching from greed to fear. The story in the paper made sense and several brokers confirmed it was true.
The attention span of a stock broker or trader is today, this afternoon, now. Stocks are up stocks are down. Buy! Sell!
Ernst and Young covers their tracks on Lehman bankruptcy
We didn’t see any Repo 105 and you should have known yourself
Ernst Young, quality in everything we do photo - Bloomberg
Contrarian pundit – Since publication of the Valukas report, the 2,200–page examination of the Lehman Brothers bankruptcy, accounting firm Ernst & Young has come under scrutiny for approving Lehman’s “materially misleading” financial statements.
Someone forwarded me a March 23 letter that Ernst & Young sent to the audit committee of one of its other clients to “address certain media coverage and commentary on the Examiner’s Report that has at times been inaccurate, if not misleading.”
I have decided to post a copy of the letter now and postpone commentary until I’ve had some time to digest it. Here it is:
Bank of America using Repo 105 Tricks
Rep 105 sounds like a schlock movie not fraudulent accounting trick used by Lehman Brothers before bankruptcy. Now Bank of America is implicated
John Hempton, a noted commentator on financial affairs, has pointed out that Bank of America may have been up to the same trick. As per usual, he forgives the fraud artists in the end.
Repo 105′s antecedents Ken Lewis
I agree with Felix Salmon that the former Lehman staffers who defend Repo 105 are psychopaths – certifiably insane. They state (as if this justifies it) that …
The only people who would worry about using an old trick to reduce leverage from 13.9 to 12.1, are “yappers who don’t know anything.”
For those that don’t know Repo 105 was a sale and repurchase agreement by which Lehman parked about 50 billion in assets (presumably assets they did not want to discuss) overnight via a repo transaction so they would not appear on the balance sheet. Read the rest of this entry »
Girl with Dragon Tattoo lambasts lazy press
Where are tough reporters to expose as traitors the financial players who have systematically and perhaps deliberately damaged their country’s economy for profit
Noomi Rapace in The Girl With the Dragon Tattoo Music Box Films
A new movie, The Girl with the Dragon Tattoo, takes us headlong into the world of 20-something hackers with a grudge. The heroine Salander is 90 pounds of she-devil rage at man and the machine. Sex, anger, Goth and tattoos with one ring in her nose make Salander a new movie heroine on the genre of La Femme Nikita without the guns.
Her boy-friend is a journalist being sued for slander when he exposed right wing industrialists. The movie comes from the popular Stieg Larsson novel of the same title. The journalist is scathing in his denunciation of a lazy mainstream press who write up press releases from corporations as though they were Oracles from Delphi.
Frank Rich, in the NY Times, uses the book The Girl with the Dragon Tattoo
How much savings do you need to retire?
The predictions of 70% of pre-retirement income are unrealistic considering savings rates and return on investment
Everybody has different circumstances. You might want to work past 65 and you might want to retire early. The secret is to stop consuming beyond your means and save 20% of gross earnings.
When I was in my 30s, I read those financial planning formulas about saving to create an income of 70% of your pre-retirement income. I worried about that and saved in RRSPs only to have them wiped our periodically by market crashes.
Then 11 years ago at age 50 I retired. It was unscientific. No adviser would have given me the go ahead but I had learned a great secret: you are never too young to retire. The trick is to adjust spending to a much lower rate of consumption.
Read the rest of this entry »
Public service negotiations sign of trouble to come
PEI Government may be boxed in by high debt and dropping transfer payments
The face of civil servants confronting the police on Greece over benefit cutbacks
We’ve been warning for two years that PEI’s extravagant spending during the recession was going to create labor unrest. The Province’s unwillingness to meet UPSE wage demands may signal the beginning of the end of free spending on PEI. To avoid social unrest, the Liberal government will try to delay the bad news until after the 2011 election.
With government’s struggling to balance the books on lowered revenues, the public service unions are already saber rattling about cutbacks. Won’t stand for wage freeze, say unions reports the CBC.
On CBC, PEI Treasurer Sheridan was nervously whistling past the graveyard. He knows transfer payments won’t keep up with PEI’s spending demands. He is starting to test the waters for civil service restraint.
Lehman Brothers Autopsy Why Auditors Have Some Explaining to Do
Repo 105 title of a dubious financing transaction that Lehman Brothers used in 2008 to make its balance sheet look healthier than it really was.
Repo 105 shady accounting by Lehman and Ernest and Young
By ProPublica – If you haven’t already watched it, Marketplace has a great video explaining Repo 105, a shady accounting maneuver through which Lehman Brothers hid its financial troubles for so long before finally filing in 2008 for the largest bankruptcy in U.S history.
As business reporters sniff through Anton Valukas’ 2,200-page “coroner’s report” on Lehman, here’s a look at all the people who’ve denied they knew anything about the “Repo 105” scam.
Dick Fuld, Lehman’s former CEO:
“Mr. Fuld, for example, denied knowledge of the effect of the Repo 105 transactions or that the firm removed assets from its balance sheet. A footnote in the report states that Mr. Fuld’s lawyer informed the examiner that he did not use a computer and only accessed e-mails on his BlackBerry but could not open up attachments, including one that went into the Repo 105 deals in March 2008.” (from The New York Times )
Lehman bankruptcy blamed on fuzzy accounting
Accounting gimmicks moved liabilities off the balance sheet while CPAs Ernest and Young approved statements
Dick Fuld former CEO Lehman Brothers
By Ryan McCarthy, Huffington Post
Lehman Bankruptcy: ‘Repo 105,’ Firm’s ‘Accounting Gimmick,’ Was Like ‘A Drug,’ Emails Show
The arcane “accounting gimmick” employed by Lehman Brothers as the firm failed in 2007 and 2008, was like “a drug” propelling the bank to conceal the true nature of its financial health, according to bankruptcy documents released yesterday.
As news organizations pore through the 2,200 pages of documents released by Anton Valukas, the examiner in charge of sifting through the most expensive bankruptcy in history, new details have surfaced about possible criminal actions by Lehman executives.
Read the rest of this entry »
Why every nation cooks its books
As we see with Greece, lying can be a recipe for disaster. But for politicians, the advantages of deception far outweigh any rewards for honesty. (And are we ready for the bitter truth?)
Greece debt crisis: Street clashes have erupted between rioting youths and police in central Athens as more than 30,000 people demonstrated against the government's planned spending cuts and to express anger over Germany’s refusal to provide financial assistance to ease the debt crisis. Nikolas Giakoumidis/AP
Continued from Canada is cooking the books
Greece cheated on its national accounts in 2009. And that led to a budget crisis in 2010. But that’s not the important part of the story.
What makes this a crisis not just for Greece but also for the euro and the European Union is that everyone — from the Greek government and its accountants to the financial officials of the EU to the experts at international watchdog agencies such as the Organisation for Economic Co-operation and Development, or OECD — knew it.
It makes you wonder what other countries are cheating on their accounts. Or maybe we should ask it this way: “Is anyone not cheating?” We all know that the United States does. But so does China, that much-admired model — at the moment anyway — of economic management. Even the Canadians — yes, the Canadians! — cheat.
Canada is cooking the books
Cheating on financial reporting allows Prime Minister Harper to deceive voters and international creditors
Stephen Harper, cooking the books to hide how serious Canada's debt has become
By Jim Jubak, MSN Money
The debt crisis in Greece is causing social unrest in Greece over government austerity and the threat of collapse of the Euro. The same forces are at play in Canada but Finance Minister Flaherty is hiding the truth.
Take a look at the finances of Canada, the extremely prudent U.S. neighbor.
Or at least that’s how the country is normally portrayed. (Being compared with the United States helps any country’s reputation for financial rectitude, of course.)
Canada is in the midst of its own budget squabble.
Because of the way (Canada) government spending is divided between Ottawa and the provinces, the difference is stunning. Remember that net debt was projected as just 31.3% of GDP in 2010. Well, the IMF projects gross debt at 79.3% of GDP in 2010.
