Friday, May 15, 2009

Retraction Friday

It was 74 degrees and very nice today. I could get used to this weather, but of course it is going to rain on Sunday and get a lot cooler next week. Still, you have to take what you can get.

I was glad I had some extra time last night to write up the section "It Depends on Your Point of View". I really like that post and think those two questions go a long way to figuring out how someone sees the financial world.

Retraction Friday
I am not sure that I should write much of anything tonight because the way things are going any quotes or information I do include will probably be retracted tonight or tomorrow. I also would like to avoid being sued by anyone should I copy a statement from them on the blog that later they claim they never said that or do not remember saying it. Who can tell.

If you are confused I will review a couple of stories from late in week that are at the minimum suspect and at worst outright conspiracy.

First up is the comments made by FDIC head Sheila Bair. All across the wires yesterday were reports that Mrs. Bair had made comments during a Bloomberg TV interview that made the claim that some banking CEO's would have to step down after taking so much government cash. You can see a Bloomberg article here, at least until it is modified or taken down.

Today the FDIC was out in force disputing that Mrs. Bair used specific wording in the interview about CEO replacements. Reuters has the "correction" here.

If and when the Bloomberg video is posted I think we will be able to make a call, but until then it seems that the allegedly independent FDIC is very keen on making sure the markets are not roiled by any comments made, or not made.

The second instance of weird really goes above and beyond simple "misinterpretation". Zero Hedge and Naked Capitalism have the full rundowns on the evolving situation and I would direct you to the links provided to get all the details.

The short form is thus:
On Thursday the Daily Telegraph (an English paper) ran a story penned by writer Ambrose-Evans Pritchard which featured excepts from the Qatar Global Investment Forum with Mark Patterson of MatlinPatterson whose firm used TARP money to invest in a Michigan bank. Mr Patterson allegedly cut loose on the program with the following harsh words:
"The taxpayers ought to know that we are in effect receiving a subsidy. They put in 40pc of the money but get little of the equity upside,” said Mark Patterson, chairman of MatlinPatterson Advisers.
Mr Patterson said the US Treasury is out of its depth and seems to be trying to put off drastic action by pretending that the banking system is still viable.
It’s a sham. The banks are insolvent. The US government is trying to sedate the public because they are down to the last $100bn (£66bn) of the $700bn TARP funds. They think they’re doing this for the greater good of society,” he said, speaking at the Qatar Global Investment Forum.
Mr Patterson said it would be better for the US to bite the bullet as Britain has done, accepting that crippled lenders must be nationalised. “At least the British are not hiding the bail-out,” he said.

Early Friday the Telegraph story was taken down and the link to it no longer works. Tyler Durden of Zero Hedge of course saved the whole thing and has it posted on his website. He is brave!

Not content with just removing the story, Mr. Patterson went on a retraction offensive and got lawyers involved. That is never good. Mr. Patterson issued a statement of clarification to the Telegraph which used terms like "fabricated", "misstated", "misquoted", and "mischaracterized" his words. Legal action has been threatened over continued posting of the original article.

This is big time folks. The forum was attended by many other players and thus what was said is sure to come out sooner or later. Would anyone be surprised if strong arm tactics were employed by the government to get Mr. Patterson to change his tune? We now have all kinds of proof that the Treasury strong armed banks to take TARP, so it would be standard procedure for them to try and squash this kind of bad press, especially in the midst of a big market rally.

Economic Disconnect did some investigation and was able to find the letter the Treasury sent to Mr. Patterson concerning his statements. This is exclusive stuff pulled from the trash and pasted back together (it had been shredded). Here is the full text( Disclaimer, obviously this is a JOKE (ie not REAL), but in today's environment I will say that up front):

To: Mark Patterson of MatlinPatterson
From: The Treasury, you Punk
Re: Stupid words, but we can save this thing yet!

Mr. Patterson,
We at the Treasury were deeply saddened to read your comments made in Qatar concerning the TARP program. While we bent over backwards to hand out money so you and your ilk could spend taxpayer money to enrich yourselves, we are rewarded with this kind of slap across the face. Here at the Treasury we have a saying:
"Don't' Piss Down My Back and Tell Me It's Raining!"
Which yes, we stole from the "Outlaw Josey Wales"; regardless please be advised that we do not take kindly to being portrayed as ripping off the public, we are doing that, but to say so is poor taste.

Luckily after review of your comment transcript we at the Treasury have a way this can be fixed. Please find the text of what your new comments to be made, no later than Friday Morinng May 15th, will include. Do not change or alter these words in any way:

"On my comments in Qatar I would like to clarify some items that were fabricated, misstated, misquoted, and mischaracterized. While I did use the word "sham" what was not reported was that I stated that the TARP program was in fact a huge "SHAM-WOW" that was in effect sopping up the market ills of bad assets. This service is vital to the smooth flow of credit to households and small business. It has been reported that I said the taxpayers were getting "ripped off" but if you listen to the transcript closely you will hear that what I said was that losses for the taxpayer on TARP had been "WRITTEN OFF" as impossible because the deal they were getting was so awesome.

Thanks in advance for any corrections and any removal of any archived web material that states otherwise.
Mark Patterson"

The Treasury trusts you will follow our guidelines as not to jeopardize the bank secondary offerings during this silly market bounce. Not that we are threatening you, but we do control the IRS and your MySpace page does include many "friends" of the female gender that are, how shall we say, of an age bracket that may become inconvenient should the FBI want to look into it. Not that we control the FBI.

Thanks in Advance,
The Treasury, you punk.

Scary letter! (Again, this is a joke!!!!!!)

Friday Night Entertainment
Some film clips, yes?

This week we saw some Stat Trek and Star Wars talk. Allow me to show you the scene that hooked me forever as Yoda teaches Luke about the Force. "Luminous beings are we, not this crude matter":

I have had this on before, but I was in the mood for the "coin toss" scene from "Old Country for Old Men". Instant classic:

Rock Blogging
We need a little rlaxation after a wild week so lets start off slow.

A nice calming tune is Ben E. King's "Stand By Me" with great string movement near the end:

From the classics vault, remember back to Richie Valens and "Oh Donna":

Mellowed out? Relaxed? Ok, we can turn it up a bit!

I found an old live clip from 1986 of Dire Staits and "Sultans of Swing"; very nice:

I loved the band Audioslave, and I lament their disbanding. Listen to "Cochise" and know they were rock's last best chance:

If a song has not been posted in over a year I can repost it! In that case I love Guns N Roses and the song from Terminator 2 called "You Could Be Mine":

Have a good night.


watchtower said...

: )

Stagflationary Mark said...

It makes me want to buy a Snuggie! ;)

Lisa said...

You've outdone yourself with that letter. :) It's probably not far from the truth. I sent an inquiry to the Daily Telegraph asking for clarification as to who, exactly, is the liar: Evans-Pritchard or Patterson. I have a hard time believing E-P committed libel, but who knows what the truth is these days.
Good music, but I don't understand the 'Old Men' video. Guess it's over my head.
And thanks, Tim, for the link last night!

GawainsGhost said...

Couple of interesting items this morning. First, there is a review of a new book, Fool's Gold by Gillian Tett, in the latest issue of BusinessWeek, which is about how JP Morgan's crack derivatives team conceived of collateralized debt obligations in 1995. The book contains a detailed explanation of how these finanical instruments are structured and their many interations, and explains how shocked Morgan was when its many rivals did not adopt its risk management strategy as the entire financial world came crashing down around them. Sounds like a good read.

Next, there's an article over at Jesse's Le Cafe Americain titled The Worst Is Yet To Come, which includes a link to a discussion with Howard Davidowitz. Highly recommended, as it pertains directly to GYC's discussion on the proper role of government and banks. Money quote: "We're now in Barack Obama's world where money goes into the most inefficient parts of the economy and we're bailing everyone out." Exactly.

GawainsGhost said...

And now for some really bad news.

Lisa said...

sigh....this country is gonna blow up. I will do my best to stay out of the fray until the dust settles. (Ok, we all know I won't) This really isn't a tax revolt anymore, it's a "clean house" revolt. This is a war for the minds of men, not for territory. The role of government? That's an easy answer: to defend a nation's people against foreign attacks and, domestically, to uphold the rule of law (individual/property rights). Nothing else. It's the role of the nation's people to make sure the government remembers it's role.

GawainsGhost said...

Correct, Lisa.

GawainsGhost said...

Over at Naked Capitalism, Yves links to videos of William Black's lecture in Iceland on systemic fraud. It's fascinating.