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Dear CIGAs,
I have my hands up here because I am walking down Wall Street.
Jim Sinclair’s Commentary
I would post CIGA Green Hornet’s comment but it is Christmas.
AIG execs haven’t repaid millions in bonuses, despite promise
December 24th, 2009, 5:00 am
posted by Teri Sforza, Register staff writer
In ‘So you nearly destroyed the global economy? Here’s your bonus!’, we told you that American International Group’shands were tied, and it simply had to pay $165 million “retention pay” to executives in its financial products division (the very division that sold the insane investments that caused its near collapse and required a $180 billionbailout from the federal government).
Why? Because AIG had promised to pay those bonuses about a year earlier, beforeFinancial Armageddon hit, and it was contractually obligated to shell out the money.
That was March. Folks went wild with fury. President Obama promised to turn over every legal rock to block the payments. New York Attorney General Andrew Cuomo threatened to publish the executives’ names. And in the end, those execs at AIG Financial Productsagreed to hand back about $45 million in bonuses by the end of the year.
By August: Less than half of that money had been returned – about $19 million, according to a report by the special auditor.
And here we are in December, with just a few days left to 2009. And complications have arisen:
Some of these executives have left AIG, taking their big fat bonuses with them.
AIG has yet another slate of bonuses it wants to hand out – $198 million in the spring – which the feds insist must be sliced some 30 percent.
So the repayment of that remaining $26 million from last spring depends on what sort of deal AIG can work out on bonuses for next spring.
A statement on the company’s web site said, “AIG continues to discuss a variety of compensation issues with the Special Master, including future payments to employees of AIG Financial Products (AIGFP). AIGFP employees have until the end of the year to fulfill their commitments to return a portion of their March 2009 payment. We expect AIGFP employees will honor their commitments. In the meantime, those employees are making considerable progress in unwinding trades and reducing risk at AIGFP.”
Jim Sinclair’s Commentary
Here is a green shot you will never hear on F-TV.
NY Fed: Home Ownership May Fall Sharply
By Paul Vigna
The homeownership rate may drop sharply in the next few years, a new paper from the Federal Reserve Bank of New York suggests. After peaking at 69% in 2006, it’s fallen to 67.3%, where it was in 2000. But the authors configure a “homeownership gap,” the difference between the current rate and a rate that excludes owners with negative equity. The longer that negative equity position persists, the greater the odds are those homeowners eventually become renters. “Our estimate of this gap suggests that the official homeownership rate will likely experience significant downward pressure in the coming years.”
Jim Sinclair’s Commentary
A society that rewards failure and punishes success is finished. It is but a matter of time.
When did priorities become so skewed? Where is the rage? In truth it is nowhere.
That is our money because it finds its source in Federal bailouts.
My heart goes out to all those suffering this Christmas at the hands these soulless demons that populate the financial world.
God help us all in 2010-2012.
Big paydays for Fannie and Freddie bosses
By Chris Isidore, CNNMoney.com senior writerDecember 24, 2009: 9:22 AM ET
NEW YORK (CNNMoney.com) — Top executives at mortgage finance giants Fannie Mae and Freddie Mac, both of which have been under government control since last year, received millions of dollars in pay this year, according to documents filed by the company Thursday.
Michael Williams, who was named CEO of Fannie Mae (FNM) on April 21, received total compensation of $6 million.
David Johnson, the chief financial officer and No. 2 at the company, received $3.5 million, and five other top executives saw their total pay package top $2 million.
Williams and three other top executives are eligible to receive an additional payment pursuant to a 2008 retention program, according to the filing.
At Freddie (FRE), its slightly smaller rival, CEO Charles Haldeman also received total compensation of $6 million and is due to receive the same pay level in 2010.
Bruce Witherell, Freddie’s chief operating officer and No. 2 at the company, received $4.5 million for each year, while Ross Kari, the chief financial officer, received $3.5 million for each year.
Jim Sinclair’s Commentary
Profit from destruction. Where is profit from building companies.
YRC Has Until Yearend to Corral Bondholders, Avert Bankruptcy
By Shannon D. Harrington and Pierre Paulden
Dec. 18 (Bloomberg) — YRC Worldwide Inc. has less than two weeks to persuade bondholders to accept a debt exchange and prevent a bankruptcy filing that its employees’ union says may force the biggest U.S. trucking company to liquidate.
YRC, which has pushed back the deadline for the swap three times this month, must complete the tender by Dec. 31 to avoid a $19 million payment of interest and fees that would leave the trucker in an “unsustainable” position, the Overland Park, Kansas-based company said yesterday in a regulatory filing.
Bonds and shares fell yesterday as the company, which posted more than $1.7 billion in losses in the past five quarters, said the percentage of creditors who agreed to the exchange fell to 57 percent from 75 percent on Dec. 15. YRC, facing a slump in freight demand, is locked in a struggle with a group of bondholders who own derivatives that would profit if the company defaults, people familiar with the situation say.
“Bondholders are in the driver’s seat,” said David Ross, a Baltimore-based analyst at Stifel Nicolaus & Co. who has a “sell” rating on the stock. “They could force the company to file if they don’t tender enough notes, and then there is a high chance the business is liquidated.”
YRC took on debt when Yellow Corp. acquired Roadway Corp. in 2003 for $1.07 billion and then bought USF Corp. in 2005 for $1.37 billion. The company has $1.6 billion of loans and bonds, according to data compiled by Bloomberg.
Jim Sinclair’s Commentary
You think the Fed can withdraw from the mortgage market? Not a chance in the world of MOPE.
US mortgage applications drop to two-month low
By Lynn Adler
NEW YORK, Dec 23 (Reuters) – Demand for U.S. home loans fell last week to the lowest level in almost two months even though mortgage rates held steady below 5 percent, the Mortgage Bankers Association said on Wednesday.
Despite surprisingly robust November home sales, weak labor markets and looming sales of foreclosed properties suggest a long road to a sustained housing recovery, economists agree.
The industry group’s mortgage applications index slid 10.7 percent in the week ended Dec. 18 to a seasonally adjusted 595.8, the lowest level since the week ended Oct. 23.
An index of demand for refinance loans dropped 10.1 percent and requests for loans to buy homes fell 11.6 percent last week.
"Affordability is high, prices are low and going lower, rates are low, there are incentives in play and that all helps," said Mike Schenk, senior economist for the Credit Union National Association in Madison, Wisconsin.
Jim Sinclair’s Commentary
You think Euroland has problems?
"The Washington Post reported Tuesday that in 25 states unemployment benefit programs have already run out of money due to record numbers of people losing their jobs. The state’s unemployment insurance programs have had to borrow $24 billion from the federal government to continue functioning.
By 2011, according to government figures, 40 states will have exhausted their benefit pools and will need to borrow an additional $90 billion from the federal government to keep afloat."
US home foreclosures top one million mark
By Andre Damon
23 December 2009
The number of US homes in foreclosure topped the one million mark for the first time ever, according to figures released this week by federal agencies. The continued deepening of the housing crisis is being driven by the relentless economic squeeze on working people, confronted with declining wages and persistent and growing mass unemployment.
Jim Sinclair’s Commentary
This is the answer from Turkey to the US’s request for placement of first warning NATO radar
and super tech facilities in Turkey to watch Iran.
Turkey dismisses missile threat from Iran
Turkish FM urges West, Iran to avoid escalating tension with heated rhetoric
Foreign Minister Ahmet Davutoglu has rejected fears that Iran, which tested an upgraded version of its most advanced missile last week, posed any threat to Turkey, saying that Ankara enjoys trust and good relations with all its neighbors.
“We see no threat from our neighbors… But we have the capacity to defeat any threat should it arise,” Davutoglu, told reporters late on Monday as he flew back from Brussels, where he attended a governmental conference during which accession talks between Turkey and the European Union on the environment chapter were launched.
He was responding to a recent report in the Turkish media that U.S. officials have asked Turkey to agree to the installation of NATO radar devices in its territory as part of a missile defense system. The U.S. recently scrapped plans for Poland and the Czech Republic to host missile shield elements to counter possible strikes from Iran. Due to a re-assessment of the threat from Iran, Washington has announced a new scheme for a more flexible system.
Iran tested the latest version of its longest-range missile, the Sajjil-2, on December 16. The missile, which has a range of about 2,000 kilometers, can reach Israel, as well as U.S. bases in the Persian Gulf region and parts of southeastern Europe, including Turkey.
Jim Sinclair’s Commentary
Remember that Monty and I say $17 to $20 trillion in debt. That is not looking so far out now.
It will all be funded by the ever increasing Instruments of Confiscation, which equals bonds.
Congress raises debt ceiling to $12.4 trillion
Senate votes to raise ceiling on government’s debt by $290 billion to $12.4 trillion
By Laurie Kellman, Associated Press Writer , On Thursday December 24, 2009, 8:29 am EST
WASHINGTON (AP) — The Senate voted Thursday to raise the ceiling on the government debt to $12.4 trillion, a massive increase over the current limit and a political problem that President Barack Obama has promised to address next year.
The Senate’s rare Christmas Eve vote, 60-39, follows House passage last week and raises the debt ceiling by $290 billion. The vote split mainly down party lines, with Democrats voting to raise the limit and Republicans voting against doing so. There was one defection on each side, by senators whose seats will be on the ballot next year: GOP Sen. George Voinovich of Ohio and Democratic Sen. Evan Bayh of Indiana.
The bill permits the Treasury Department to issue enough bonds to fund the government’s operations and programs until mid-February. The Senate will vote again on the issue Jan. 20.
Obama must sign the measure into law to prevent a market-rattling, first-ever default on U.S. obligations. The government piled up a record $1.4 trillion deficit in 2009 to counter a meltdown in financial markets and help bring the nation out of its worst recession in seven decades.
The early-morning vote followed the Senate’s passage of a landmark bill to overhaul the nation’s health care system. They were the Senate’s last votes of the year.
Jim Sinclair’s Commentary
Shorting via OTC derivatives what you sold to others. That is considered an act of genius in Wall Street.
What happens when the fattest shark eats the last shark? The fat one starves to death.
Banks Bundled Bad Debt, Bet Against It and Won
By GRETCHEN MORGENSON and LOUISE STORY
Published: December 23, 2009
In late October 2007, as the financial markets were starting to come unglued, a Goldman Sachs trader, Jonathan M. Egol, received very good news. At 37, he was named a managing director at the firm.
Mr. Egol, a Princeton graduate, had risen to prominence inside the bank by creating mortgage-related securities, named Abacus, that were at first intended to protect Goldman from investment losses if the housing market collapsed. As the market soured, Goldman created even more of these securities, enabling it to pocket huge profits.
Goldman’s own clients who bought them, however, were less fortunate.
Pension funds and insurance companies lost billions of dollars on securities that they believed were solid investments, according to former Goldman employees with direct knowledge of the deals who asked not to be identified because they have confidentiality agreements with the firm.
Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc., an investment company whose parent firm was overseen by Lewis A. Sachs, who this year became a special counselor to Treasury Secretary Timothy F. Geithner.
Jim Sinclair’s Commentary
They might have gotten it wrong.
We know there is huge profits to be had in a mountain of garbage paper, however that is OTC derivatives that continue to multiply, as in "The Trouble with Tribbels."
However if this Shanks as in prison they might be right.
Major NY investment firms are arming themselves. It is a good idea when you sell your clients crap and then go short or even sell your clients crap short!
Carlyle confirms interest in Shanks
The US private equity group says it is in preliminary discussions with Shanks about a takeover offer
Rebecca O’Connor
December 24, 2009
Carlyle, the US private equity group, said this morning that it is mulling a takeover bid for Shanks, the waste management company.
Carlyle confirmed that it had made an approach to the Milton Keynes-based group after Shanks posted a statement giving details of a 135 p-a-share offer on December 7.
Shanks said that it would be open to a 150p-a-share offer, which it added would offer "appropriate value to shareholders".
Europe’s largest quoted waste management group said it is in discussions about the approach with its two largest shareholders, Legal & General and Schroders, which have said they favour the higher offer level.
The US buyout firm said that discussions were preliminary and that there was no certainty an offer would be made.
Jim Sinclair’s Commentary
When MOPE and the rating agencies call your attention to Greece, Spain and Ireland, think California.
This is only the state of a flood of same-similar. If you like the US dollar you have to love this.
Hat in hand, Schwarzenegger looks for $8B.
Sources say California Governor Arnold Schwarzenegger will ask President Obama for $8B in relief to ease large-scale cuts to the state’s already diminished social programs amid a $21B anticipated deficit. "We’ve already gone after the low-hanging fruit and the medium-hanging fruit and the higher-hanging fruit, so it’s going to get tougher and tougher now to balance the budget," the governor said recently. The state was the biggest bond issuer this year, selling $36B.
