International Forecaster Weekly

Never Forget The Fed Caused The Economic Downturn

The Fed that destroys and The Fed that claims to repair, Milken still rich, wake up to revolution in 2011, few jobs created last year, billions in costs to taxpayers, tax breaks for the mega rich, flat Christmas, TSA gets in your pants, understanding the looming crisis.

Bob Chapman | January 1, 2011

Chairman of the Federal Reserve, Ben Bernanke, would have us believe that if it were not for QE1 unemployment would have been considerably higher. Since QE2 began in June, U6 has only improved by ¼%. Perhaps better numbers are on the way, but that has not been an auspicious start. If we remember correctly almost all the funds in QE1 and now in QE2 have been lent to financial firms in the US and Europe, transnational conglomerates and governments and central banks. Most of those funds have been held on balance sheets to fain solvency. Very little has reached the public or to reduce unemployment. All we have to show for 2-1/2 years is a financial sector hanging on by a thread and more massive debt in the trillions.

What should be permanently stamped in your minds is that the financial carnage we have experienced is the fault of the Fed and the financial sector and that same Fed bailed out the crooks and left the public high and dry with 22-3/8% unemployment and a shattered residential and commercial real estate sector that is still two years from the bottom and perhaps 30 years away from appreciation.

It is despicable for Mr. Bernanke to have insinuated he helped avert higher unemployed when it was the policy of the owners of the Fed and Wall Street and banking, which was the cause of the worst depression since the “Great Depression” of the 1930s. It should be noted that the end of the damage is nowhere in sight. Throwing trillions of dollars at a problem doesn’t solve it, and in this case will only make it get worse. In addition, trillions of dollars in wealth were destroyed and as a reward for their greed the Fed, which allowed the public to pay for the Ponzi scheme, protected the financial sector.

As far as we know the Fed has already purchased with taxpayer funds about $1.5 trillion in MBS, known as toxic waste, which was created by the financial sector. The question is how much more has been purchased by the Fed and are they going to purchase more to bail out financial institutions and others? One of the things that is never mentioned is restitution for all the money these crooks stole. In a civil action concerning $5 billion in bogus MBS and other derivative products, Goldman Sachs, neither admitted or denied, and was found guilty of civil fraud, and paid a fine of $500 million. They got to keep the other $4.5 billion - another sweetheart deal to permanently protect them of criminal charges. Michael Milkin stole $3 billion, gave $1 billion back and kept $2 billion after doing 1-1/2 years in a prison country club. Then there was Warren Buffet’s, Berkshire Hathaway, which defrauded the government of $300 million. His firm paid a $100 million fine and kept the rest. Milkin was the exception, no one else since has been incarcerated. As you can see, it pays to be an elitist crook in America.

Now banking and Wall Street gets interest-free money, but the public does not. What is wrong with the public? Don’t they realize what is going on? What has happened to our representatives and senators and our courts? We’ll tell you what has happened; the NYC-Washington crime syndicate is paying almost all of them off. Americans have lost control of their government and if the slight improvements in the past elections are indicators, the situation is going to get worse.

As a result the Fed is monetizing debt in order to bail out government, banking and Wall Street, and to offset the persistent undertow of deflationary depression. All we can say is what is wrong with the American people? Can’t they see what is going on? If they do not wake up soon we could have a revolution on our hands.

America is facing almost zero interest rates. If those rates are raised the bottom will fall out of the economy and the financial structure will collapse. Any talk about higher rates is just that – talk. The only way out now is for the elitists to have another war as they did in 1941. How much longer can corporations keep two sets of books? What you have seen just didn’t happen, it was planned that way to force Americans and Europeans to accept world government.

Due to the current power of the Fed and other interconnected central banks, all other factors take a back seat to credit creation and their creation of money supply. Under mercantilist Keynesianism, which we prefer to call an economic plan for corporatist fascism, the greater the distortions the deeper the depression. This is the method of perpetual political and social control, which in one way or another has been successful over the centuries. These are the same people who have deliberately created economic cycles, which are extremely profitable, and when things are not going as planned they simply have another war. None of what you have seen has happened by chance, it has been planned that way.

As George Wallace said, “there isn’t a dime’s worth of difference in either party.” He was right. What he should have said was both parties are almost totally owned by Wall Street, banking, insurance, big Pharma and transnational conglomerates. The criminal deals that have and continue to exist in Washington are far worse than anything the Mafia ever did. Our government is operated just like any criminal syndicate.

What is becoming evident to us is that all is not going well for the Titans of Wall Street. Investors have been fleeing the stock and bond markets in hordes, although their owned rubber stamp is still in place. In fact, some of the higher placed elitist players are questioning whether they can again pull off a deflationary depression and war and still survive? As you can see they still have more than 50% of the electorate buffaloed, but as any student of history knows revolutions are led by 5% to 15% of the citizens. The rest are split along the sidelines.

Oddly enough what has suited both Democrats and Republicans has been a big loser for Americans, because the elitists almost in total control both parties. As a result, major Wall Street firms, which have for years owned the SEC and the CFTC now have virtually no regulatory oversight. Essentially Wall Street has a license to steal and they take full advantage of it.

The big question is can Ron Paul disarm or perhaps even eliminate the privately owned Fed? The answer to that question we should have over the next two years. Will it take a constitutional amendment or a monetary collapse? Again we will have to wait and see. It should be noted that after China and Japan the Fed now holds third place among those holding Treasury and Agency bonds. More than 60% of Americans want to dump the Fed and Wall Street, which owns the Fed, owns Congress, thus it will have to change by other means.

The greed of transnational conglomerates just never ends. Readers you are soon going to witness another great scam pulled off by America’s elitist corporations to further enrich themselves at your expense.

In a secret meeting on December 15th, business executives met in the White House requesting that the President declare a tax holiday, so that they could repatriate as much as $1.9 trillion from offshore subsidiaries in tax havens such as the Cayman Islands. Instead of going through Congress as they had to do six years ago, these crooks want an executive order. We were wondering how long it would take them to be back at the trough.

To make it simpler, participants recommended a reprise of a 2004 tax holiday that allowed these multinational conglomerates to return profits to the US at a tax rate of 5-1/4%, not the regular 35%. That piece of largess allowed these crooks to move $362 billion virtually tax free back into the US by declaring they will use the funds to create jobs for Americans. Needless to say, very few jobs were created. That money laundering operation and this new proposed operation would move part of $1.9 trillion into the US stock market, as was done before, to buy the shares of these US blue chips, which in turn buoys the stock market. The shares would rise in value as they did six years ago, and the executives would cash in their stock options making themselves billions of dollars. This is what this was all about last time and it is what it is all about this time. If under normal circumstances these companies paid the 35% tax they would owe the American people $665 billion. At a 5-1/4% tax rate that figure would be just under $100 billion. Is it any wonder that our government is broke?

In addition to this new caper in banditry these multinationals are already finding legal ways to avoid taxes. We won’t go into the details here but believe us their actions of the last five years have cost taxpayers billions of dollars. These US companies are very sophisticated and are routinely repatriating hundreds of billions of dollars in foreign earnings.

This is one of the main reasons tariff walls were torn down and why today we have free trade, globalization, offshoring and outsourcing. This not only enabled these crooks to pile up profits in tax havens, but it has hastened the demise of the American economy, so that Americans will be forced to accept world government, something these fascist monopolists want to take place in order to impose a new world order. This is really what this is all about. This is much more than meets the eye if you know what to look for.

Needless to say, there is a very simple solution to this financial treachery. All we have to do is re-impose tariffs of 25% to 40% and then there would be no reason to hold earnings offshore. This exercise over the past ten years has cost America 42,000 lost businesses, which were shipped overseas as well as 8.5 million high paying jobs. You ask yourself how could this happen? The answer is your House and Senate are bought and paid for and whatever these elitists want they get. If tariffs are not soon implemented there will be no way back for the US and European economies.

The answer by these transnational conglomerates is America is uncompetitive due to its tax structure. They convinced Congress of this some time ago and that is why they are allowed to keep profits offshore. The problem is when they bring those profits back to the US it is at 5-1/4% and these profits end up in the stock market for reasons we’ve explained. Thus, they get enormous tax benefits but in the process they destroy the underpinnings of society. In 1967, we wrote an article in a leading journal stating that this was where the elitists were headed and the article has proven prophetic. The American Mercury is no longer actively with us but its legacy is. Such tax breaks for the mega rich holds no water. These are the same corporations that in part are already sitting on another $1.9 trillion in cash in the US. This has nothing to do with investment or job creation and everything to do with corporate greed. This infusion of offshore funds onto the active US balance sheet has a tremendous levering effect as well on earnings.

We have all the dirty details but we’ll spare you homework. It is the way we say it is. Let’s see if they try to end run Congress on this issue and perhaps in the interim we can find out how much the President is being paid for ramming through such a grand venture. Why do you think such meetings are secret?

If you are wondering why your country is broke, one of the reasons is the antics of these elitists, when great profits are never enough.

First it was Argentina two years ago, then Hungary and France and now it is Poland. Argentina took over pensions and the others are using pension funds. Poland wants to limit transfers to private pension accounts to plug a widening budget deficit.

Poland faces an excessive debt, in part a result of pension contributions. Legislators want to limit transfers not temporarily but permanently. That being the case this move is not to solve a short-term problem, but a new policy to cut off retirees from their benefits and to spend the funds elsewhere. Politicians being what they are won’t reduce the deficit appreciably. The idea is to cut pensions from 7.3% of salaries to 2%. Just to give you an idea as to how efficiently government has been run since 2007, the deficit went from 1.9% to 7.9% of GDP. The pension flow demand is 40% of GDP. As you can see worldwide everything is on the table and America will be no exception.

Even though Ben Bernanke may end up being recognized as a disaster for the American economy, he is particularly popular on Wall Street and in banking. He supplies the liquidity for financial institutions to increase profits hopefully exponentially. Simultaneously, via the “President’s Working Group on Financial markets,” he directs the manipulation of markets. The results are known as the Bernanke put. There simply cannot be market and bond declines except for gold and silver. The latter have been restrained, but only on a temporary basis, because that is what they now are only capable of.

As we wrote this past January, the effect of stimulus would end in April and in May some sort of effort had to be put forward to help a sagging economy. That came in the form of aid from the Fed in the bond market and via swaps. This proved an important event because we could then see that the Fed had to get more accommodative and allowed us to predict QE2. Thus, there is the Bernanke put. You can be sure he guaranteed Wall Street, before he was ever appointed, that he would do exactly as they instructed. No one has ever had that job that didn’t do so, and those orders come from JPMorgan Chase, which is the ringleader and always has been. Why do you think we have quantitative easing and zero interest rates? Those are Morgan’s orders. From Ben’s utterances we believe there will be a QE3 and more as we move toward hyperinflation and we predicted that last May. We also see indefinite low interest rates. He and they are not really concerned about the dollar. They have influenced many other nations to do the same thing, so its bad currency versus bad currencies. This way they can lay off their inflation on everyone else. That is why they have suppressed gold and silver because versus all currencies they are the only alternative. In that process they will make those who understand what the Fed is up to, essentially the Fed’s enemies, wealthy, an unavoidable fallout the elitists will have to live with to retain control of the system.

Mr. Bernanke arrogantly tells us he saved the system. What he should have said is that I saved the finance houses and moneylenders at your expense, it is the way we have done it for the last 1,000 years. If you do not understand monetary, financial, fiscal, political and social history, you cannot get it. You will never be able to get to the bottom of what these people are up too. This is how we are able to make the calls we do. You take this history and you get inside of the minds of these people and you then figure out what they will probably do next. That is why we have recommended gold and silver related assets for the past ten years and this game is far from over. The US will devalue and default along with everyone else and then re-back a new dollar with gold at a considerably higher price. Gold and silver are in the early stages of phase 2 of 3, 4 or 5 stages in the biggest bull market in history. If you don’t play you cannot be a winner.

Once again the usual suspects trumpeted a decline in Initial Jobless Claims (388k from 422k) while they ignored a 57,000 jump in Continuing Claims (4.128m from 4.071m) and the NSA increase of 24,879 - Initial Jobless Claims, to 521,834.

The reality is 521,834 people filed Initial Jobless Claims and 4,095,135 filed Continuing Claims.

Both Initial and Continuing Claims were revised higher from the previous week…Larger than expected declines in Initial Jobless Claims occur during holiday weeks yet most people don’t ‘get it’.

The mathematics of a large and prolonged drop in employed workers dictates that Initial Claims should be falling even with a rotten employment picture. Plus millions of people have exhausted claims.

Once again the Chicago PMI is better than expected, showing its highest reading since July 1988!!! The employment component is at a five year high! This alone is enough to invalidate this report because manufacturing employment has fallen for four consecutive months in the employment report.

We have warned for years that the Chicago PMI consistently shows more strength than ISM or other manufacturing surveys. And over the past few years, PMIs have been showing unwarranted economic strength due to ‘survivor bias’ and robust ‘expectations’.

“Inventories” soared to 60.1 from 48.4. We heard no mention of this from the usual suspects.

Discover [Card]: Small Business Economic Confidence Falls after 3-month Rise - The monthly index dropped to 81.6 in December, down 5.6 points from November. The index remains 4.6 points higher than one year ago.

Twenty-five percent of small business owners said the economy is getting better this month, down from 33 percent in November; 51 percent said it is getting worse, up from 46 percent; and 22 percent said the economy is staying the same, up from 17 percent the prior month…"Like the rest of us, they're seeing some positive signs, but they aren't ready to declare victory, especially not with 62 percent of them still rating the economy as poor."

MasterCard Advisors said retail sales soared 5.5 percent this holiday season, excluding car sales. Clueless journalists gushed that "the consumer is back."

Even one careful analyst on the economy cheered in his newsletter that this was the largest increase in five years amid an "orgy of consumerism."

Seriously, does anyone really think consumers went crazy this Christmas? With unemployment at 9.8 percent? It really doesn't make sense. So I asked MasterCard Advisors whether its numbers excluded gasoline sales, which are only increasing because of an unhealthy spike in prices.

I received this clarification from a spokesman for MasterCard Advisors: "The 5.5 percent increase during the period Nov. 5 through Dec. 24 is a total retail . . . number, so it'll include food, restaurants and gasoline. SpendingPulse measures total retail the same way that the Department of Commerce does."

Look closer at the survey of that 0.8 percent sales gain in November and it's even worse. When I asked, the Census Bureau said that a 4-percent jump in the price of gasoline had accounted for 0.3 percentage points.

So we don't know how much of Christmas sales were really wasted on the inflated prices of products that would have been purchased anyway -- gasoline but also food and especially clothing, which has been jumping in price along with the price of cotton…

The Energy Department says gas prices went from a nationwide average of $2.91 a gallon in mid- November to $3.05 a gallon around Christmas time. That's a 4.8-percent increase and indicates that a lot of this holiday's spending wasn't for the purpose of joyful gift- giving but rather went toward filling Luke's pickup.

Selfish Sanitation Department bosses from the snow-slammed outer boroughs ordered their drivers to snarl the blizzard cleanup to protest budget cuts -- a disastrous move that turned streets into a minefield for emergency-services vehicles, The Post has learned.

The snowstorm that paralyzed New York this week struck just before 100 of the supervisors coordinating the city's plowing fleet were to be demoted to lower-paying jobs in a budget-cutting move.

The timing of the demotions, scheduled for Jan. 1, ignited speculation that disgruntled sanitation department foremen had purposely sabotaged snow removal.

The trustee attempting to recoup money for the companies of convicted Ponzi scheme figure Tom Petters has sued J.P. Morgan Chase & Co., seeking more than $300 million in multiple lawsuits.

The money involved includes millions the bank took from Mr. Petters's accounts after his downfall and profits and fees it got from Mr. Petters's purchase of iconic camera company Polaroid Corp., which had been majority owned by J.P. Morgan's private-equity arm at the time.

In the latest lawsuit, filed Wednesday in federal court in Minnesota, Douglas A. Kelley, the court-appointed receiver for Mr. Petters's companies, alleged that the company had defrauded them.

[The Ghost of Christmas Future] A plan backed by Gov. Mitch Daniels would allow local governments in Indiana to ask for a state takeover and declare bankruptcy if necessary.

The emergency manager would have the power to cut the budget, renegotiate labor contracts, and approve or veto contracts, expenses, loans and hiring.

The political leaders of this old working-class city almost surrounded by Detroit are pleading with the state to let them declare bankruptcy, a desperate move the state is not even willing to admit as an option under the current circumstances.

“The state is concerned that if they say yes to one, if that door is opened, they’ll have 30 more cities right behind us,” Mr. Cooper said…

Federal prosecutors in Manhattan have filed new charges as part of a national probe of insider trading, accusing a California consultant for an expert-networking firm with selling inside information to two unidentified hedge funds.

Winifred Jiau allegedly sold data on Nvidia Corp. and Marvell Technology Group, makers of computer components, through the networking firm. The hedge funds paid her $200,000 through the firm, prosecutors alleged.

Jiau, 43, is charged with one count each of conspiracy to commit securities fraud and securities fraud. The first count carries a maximum sentence of 20 years in prison. She was ordered held in custody by US Magistrate Judge Nandor Vadas in San Francisco, who set a hearing for Jan. 12 on whether to transfer her to New York. She did not enter a plea.

Her arrest follows charges earlier this month against three technology company workers who allegedly sold secrets about Apple Inc., Dell Inc., and Advanced Micro Devices Inc. The men, who worked at AMD, Flextronics International Ltd., and Taiwan Semiconductor Manufacturing Co., were arrested on securities fraud and conspiracy charges.

Also arrested at the time was James Fleishman, a sales manager at Primary Global Research LLC, the expert-networking firm where the three worked as consultants. If convicted, all four face as long as 20 years in prison.

Expert-networking companies match investors with specialists who provide insight into specific markets.

The criminal complaint unsealed earlier this month against the men described the links between Primary Global, the technology experts it employed, and unidentified hedge funds willing to pay for inside information.

Marvell, which makes chips for the BlackBerry phone, declined to comment. Nvidia said Jiau was a contractor who left the company about a year ago.

Officials from the U.S. Department of Homeland Security (DHS) seem to now be going on the offensive against those who oppose its new invasive and unconstitutional airport security protocols being carried out by agents of the U.S. Transportation Security Administration (TSA). According to George Donnelly, owner of, government workers appear to be posting hateful messages on his anti-TSA blog under the guise of anonymity.
One such comment, which has since been deleted, said, "F**k you, f**k all you c**ksuckers, you wont change anything." Another stated, "Ride the bus, TSA is here to stay there [sic] doing a great job keeping americia [sic] safe."

Donnelly says that upon tracing the origin of the comments, he discovered that they came from the servers of, the official website of the U.S. Department of Homeland Security.

A series of independent studies and reports at various levels are jolting Americans out of their sense of lull over a looming crisis that has been in the offing for quite some time now, but was largely ignored. The growing student debt in colleges and universities across the nation seems to be headed in the direction of the massive foreclosure crisis, going by recent data released by the U.S. Department of Education.
Graduating students listen to U.S. President Barack Obama speak at the University of Michigan commencement ceremony in Ann Arbor, Michigan May 1, 2010. The government is increasing its Pell Grant program and making loans directly.

The report shows that the national cohort default rate on federal student loans is 7 percent for borrowers who entered repayment in 2008, which is comparable with the default rate for credit cards (8.8 percent) and home mortgages (9.1 percent). In fact, earlier this year it came to light that the total amount outstanding on student loans was $875 billion, which actually exceeded the amount that Americans owe on their credit cards.

Another report from the Project on Student Debt - an initiative of the non-profit Institute for College Access and Success - indicates that college seniors graduating in 2009 had an average of $24000 in student loan debt, marking a 6 percent rise from the previous year. These figures, however, are based only on data reported voluntarily by public and private non-profit four-year colleges and the actual average is likely to be significantly higher when one takes into account many for-profit institutions, where student loans are typically higher.

What is more alarming is that the default rate in for-profit institutions is also the highest and students in these institutions are also known to enter more risky, non-federal loan agreements. 43 percent of all student loan defaulters attended for-profit schools even though they represent only 10 percent of all university students.

For most American students, a four-year college degree is affordable only when they consider loans. But even as college costs in America skyrocketed, few students or their families seemed to be bothered by it because of the ease of credit, planning to address the issue when the time to foot the bill arrived. Many of the for-profit schools are also accused of deceptively luring students into signing up for programs and loans, even when they knew that their earning potential post graduation was not likely to match the repayment requirements.

The situation has been made worse by the recession that dried up jobs for graduates. The Project on Student Debt report puts the unemployment rate for recent college graduates at 8.7 percent in 2009 (up from 5.8 percent in 2008), the highest annual rate on record for college students between the ages of 20 to 24.

Lack of employment opportunities, inability to refinance and the lack of options to wipe out the debt in bankruptcy means that students are left with a crushing lifelong burden affecting their credit histories and long term spending capabilities; this, if sustained, could have a significant depressive effect on the economy as a whole.

Small steps have been taken to stem the problem at the root. For example, speaking to CNBC in an interview, Secretary of Education Arne Duncan pointed out that in the first steps towards reform of the educational loan system, the government has begun lending directly to students, rather than subsidizing and guaranteeing loans from private lenders. This has reportedly resulted in savings that are being funneled into an additional $40 billion worth of Pell Grants, the need-based Federal assistance granted to low-income undergraduate and certain post baccalaureate students. There is also a proposed government crackdown on for-profit colleges, which would tie the institutions' aid to the eventual employment of their graduates and rates of default among them.

However, for a vast majority of college students and their families, already saddled with growing interest burdens and a bleak employment market, these steps hold no promise.

Claims for jobless benefits dropped last week to the lowest level in two years, showing the U.S. labor market is taking a turn for the better as the economy accelerates into 2011.

Applications for unemployment assistance decreased by 34,000 to 388,000 in the week ended Dec. 25, breaking the 400,000 level for the first time since July 2008, according to Labor Department figures today in Washington. Other data showed businesses expanded this month at the fastest pace in two decades and pending home sales climbed in November for the fourth time in five months.

Mortgage rates for U.S. loans climbed to a seven-month high, increasing borrowing costs for homebuyers in a sluggish real estate market.

The average rate for a 30-year fixed loan rose to 4.86 percent in the week ended today from 4.81 percent, Freddie Mac said in a statement. The average 15-year rate advanced to 4.2 percent from 4.17 percent, the mortgage-finance company said.

A state authority may decide today whether to assert control over Nassau County’s finances, moving beyond an oversight role because elected officials haven’t closed next year’s $343 million budget gap.

The Nassau County Interim Finance Authority, created in 2000 to sell bonds and oversee operations while the county worked out earlier deficits, meets today at 10 a.m. in Uniondale. Nassau, which abuts New York City’s eastern edge on Long Island, has the highest median household income of any county in the state at $92,221, according to census data.

The county’s budget doesn’t meet “the standards of prudence necessary for us to project budget balance,” according to a Sept. 28 authority report. It said the county relied on $61 million of concessions by labor unions that may not happen and on bond sales to pay property-tax refunds, an operating expense.

Next year’s budget avoids raising property taxes, already the second highest among U.S. counties, and relies on cost cutting, fee increases and borrowing. The county, with a November jobless rate of 7 percent compared with 9.8 percent nationwide, still must cope with revenue growing more slowly than costs as do local governments across the U.S.

County officials say the budget is plausibly balanced, and say they would fight a declaration of a control period by the authority. If it takes over, the seven-member board’s approval would be required for new contracts and borrowing, according to the law creating the authority. It also would be empowered to freeze wages and issue binding orders to elected officials.

The Institute for Supply Management-Chicago Inc. said today its business barometer rose to 68.6 this month, exceeding the most optimistic forecast of economists surveyed by Bloomberg News and the highest level since July 1988. Figures greater than 50 signal expansion.

Gains in business investment on new equipment and growing exports to emerging economies will keep factories churning out goods in the coming year, contributing to the recovery. Reports showing consumer spending is also picking up mean retailers will need to restock shelves, giving manufacturing a further lift.

“The economy is gathering momentum,” John Silvia, chief economist at Wells Fargo Securities Inc. in Charlotte, North Carolina, said in an interview on Bloomberg Television. “New orders will follow the better business confidence that is showing up. Once the American consumer starts kicking in, we will see stronger orders data.”

Former Obama administration auto industry czar Steven Rattner has agreed to pay $10 million to resolve two lawsuits by New York's attorney general related to alleged kickbacks involving the state's pension fund.

Rattner also agreed to be banned from appearing in any capacity before any public pension fund in New York for five years.

Attorney General Andrew Cuomo announced the settlement, which ends two lawsuits by his office. These had sought to recover at least $26 million from Rattner and permanently bar him from the securities industry in New York.

Rattner is the last major figure to resolve allegations by Cuomo in the attorney general's long-running investigation into alleged wrongdoing in the roughly $130 billion New York State Common Retirement Fund.

Cuomo said he has won eight guilty pleas in the probe, including from former state comptroller Alan Hevesi, and more than $170 million of settlement payments.

The Rattner settlement "resolves the last major action of our multi-year investigation," Cuomo said in a statement. "We have been able to help restore and protect the integrity of the state pension fund."

In a statement released by Cuomo, Rattner said he was pleased to settle, and that the accord "allows me to put this matter behind me. I apologize if during the course of this process there is anything I did that may have made reaching this agreement more difficult."

Cuomo and the U.S. Securities and Exchange Commission had accused Rattner of entering quid pro quo arrangements with the pension fund to win $150 million of business in 2005 and 2006 for Quadrangle Group, the private equity firm he co-founded and worked for at the time. He no longer works there.

Rattner entered a civil settlement last month with the SEC, agreeing to pay $6.2 million and accept a two-year ban from working with an investment adviser or broker-dealer.

Quadrangle, Rattner and Rattner's lawyer were not immediately available for comment on Thursday.

Cuomo will become New York's governor on Jan. 1.


The US 7-year auction went well because ‘indirect bidders’ (central banks) bought 64.2% of the notes. Dealers had to warehouse only 31.2%; so a spirited bond market rally appeared after the auction.

If central banks have to buy almost 2/3 of a US auction, the bond market has a huge problem. But dealers, traders and PMs desperately needed any excuse or sophistry to mark up bonds for yearend.

Chase hiking fees on more services [more inflation that won’t show in CPI]

Wall Street’s best investment continues to be the bribery of Congress via direct payments and lobbyists.

Wall Street’s biggest banks, whose missteps caused a global financial crisis and economic slowdown two years ago, were more agile when it came to countering the political and regulatory response.

The U.S. government, promising to make the system safer, buckled under many of the financial industry’s protests. Lawmakers spurned changes that would wall off deposit-taking banks from riskier trading. They declined to limit the size of lenders or ban any form of derivatives. Higher capital and liquidity requirements agreed to by regulators worldwide have been delayed for years to aid economic recovery.

“We continue to listen to the same people whose errors in judgment were central to the problem,” said John Reed, 71, a former co-chief executive officer of Citigroup Inc., who estimated only 25 percent of needed changes have been enacted. “I’m astounded because we basically dropped the world’s biggest economy because of an error in bank management.”

[What FINRA is trying to accomplish here is to impress their regulations on the Canadian stock markets. What they are talking about here is Black box trading, called flash trading, or high frequency trading which is in reality front-running, which is illegal in the US, but FINRA and the SEC refuse to bring it to a halt. The Canadians are doing it and beating up on the big US brokerage firms, such as Goldman, Morgan, Citi, etc. thus, what FINRA is trying to do is to eliminate competition against major US brokerage firms, who operate illegally. You might call this selective prosecution, because thousands of complaints are entered against naked shorters in the US and absolutely nothing is done about it and the SEC staff is arrogant and abusive to complaints that own companies. This is a complaint cloaked in an attempt to visitate FINRA rules on Canadian firms. We might add that the Canadian exchanges and regulatory bodies vigorously pursue naked short trading, which is banned in Canada as it is in the US.] Pure Trading was once again Canada's third most active alternative trading system during the 4.5-day week ended Dec. 24, 2010. The most active ATS was Alpha Trading Systems with an average of 172 million shares a day or 17.2 of the total market. In second place was Chi-X with 45.1 million shares or 5 per cent of the market. Pure traded 21.2 million shares a day or 2.3 per cent. In last place was Omega ATS with 8.8 million shares or 0.9 per cent. Combined, the ATSs accounted for 25.3 per cent of the market, while the Toronto Stock Exchange, TSX Venture Exchange and the Canadian National Stock Exchange got the remainder.

Taking a look at only TSX listings, Alpha captured 22.1 per cent, up from 19.2 per cent last week; Chi-X had 5.7 per cent and Pure took 3.8 per cent. The TSX captured only 65.6 per cent of market volume, down from 66.9 per cent a week earlier.

Only the TMX Group had something to brage about this week. Its Montreal Exchange set a volume record. On Dec. 20, the MX had a year-to-date volume of 43.4 million contracts, up from its previous record of 42.7 million contracts in 2007.

The United States Financial Regulatory Authority chief executive officer, Richard Ketchum has presented his year-end report. He notes that FINRA's "first truly effective case addressing high frequency trading" occurred this September. The regulator fined New York-based Trillium Brokerage Services LLC $2.3-million, and suspended 11 of its employees for using a HFT strategy to gain an advantage. FINRA says Trillium repeatedly entered orders, which created a false appearance of buy- or sell-side pressure, prompting other traders to buy and sell before Trillium quickly cancelled its own orders. Finra says nine Trillium traders were able to trade at advantageous prices on 46,000 occasions. The brokerage did not admit or deny the charges but did consent to the entry of the findings. Over 2010, FINRA says it levied $41.1-million in fines. In the New Year, Mr. Ketchum says FINRA will watch for price maneuvering by brokerages.