Opening Bell: 12.31.08

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Madoff Investigation Shifts to Offshore Role (NYT)
If, at the beginning of the year, someone had predicted that at the year's end we would be knee deep in shit from a madman creating a $50B Ponzi scheme I would have simply replied "I'll buy the drinks for that show"; it's clear now that by the time this settles I would have been broke and suffering from liver/kidney failure.
At the Times we've got Madoff being investigated for his possible offshore activity - adding the "illegal" seems unnecessary as anything he was doing was actually in the commission of the biggest Ponzi ever pulled. They're looking into tax avoidance and fraud - rumor has it UBS was consulted on the former back in the day but turned the gig down as they only deal with "large scale" operations.
Fed To Purchase $500B In Mortgages, Continued... (Reuters)
The Fed has announced that it plans on following through with the MBS purchase plan. If you weren't paying attention at some point:
"The Fed selected investment managers BlackRock Inc (BLK.N), Goldman Sachs Asset Management (GS.N), PIMCO, and Wellington Management Co to implement the program."
Who didn't see Goldman popping up on the list? Really? I'm a massive fan of nepotism on a personal level, but in the wake of the SEC/Madoff mindfuck it seems that the prudent government move would have been to separate itself from the purchase of assets that could very well (further) influence what players are left on the Banking Field in the near future.
Credit Suisse To Sell Part Of Global Investors Business Line (Bloomberg)
The marginally less tax-evade-y Swiss bank in townhas announced it's going to sell off part of it's Global Investors line, which "includes fixed-income, equity and money market funds" to Aberdeen Asset Management for $361MM in stock.
GMAC Uses Fed Money To Create Liquidity (WSJ)
They're going to be offering loans of the 0% variety on five vehicles, and loans ranging from .9% to 5.9% en masse it appears. I don't know that any of this will help either the company or the American public/infrastructure at large, but it was a nice thought.
Paulson, Run Amuck (Reuters)
While (the real) Paulson (to us) is looking to buy distressed debt with his $36B baby Paulson & Co, he's also slinging mud at the rest of the industry for gating redemptions and clawing for survival. Because opening up the Funds for full redemption won't be anything like a bank run, or cause the sudden sell-off of Billions of dollars of equities. No, Paulson, people are completely rational right now.
UBS Sells Off Bank Of China Stake (Reuters)
"Straitened (sic) Swiss bank UBS AG said on Wednesday it had sold its stake in Bank of China at a discount to institutional investors and would book a gain of a "few hundred million dollars" in the fourth quarter."
Here's the story in a nutshell: UBS needs money so they're selling off whatever they can. Banks (even ones in China) pose an unnecessary risk, so they're the first to go.


AIG Looking For Fed To Relax (FT)
AIG wants the Fed to back off its rule that purchasing companies have to present 90% cash. The ability to take shares for the pieces it sells off would allow for more bidders, in theory.

--William Richards

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Germany Hints At More Financing (WSJ) Germany on Wednesday signaled its willingness to provide additional financing for the euro zone's bailout fund and accept lower interest on loans to Athens, in order to get the Greek rescue back on track and free the next tranche of about €44 billion ($56.40 billion) in loans for the euro zone's weakest member. Merkel Sees Chance For Greek Deal Monday (Reuters) "I believe there are chances, one doesn't know for sure, but there are chances to get a solution on Monday," Merkel told the Bundestag lower house of parliament in a debate on the German budget. But the longing for one act, one miracle solution, one truth that means all our problems are gone tomorrow...this will not be fulfilled. What was neglected over years, over decades, cannot be taken care of overnight and therefore we will need to continue to move step by step." H-P Says It Was Duped (WSJ) The technology giant said that an internal investigation had revealed "serious accounting improprieties" and "outright misrepresentations" in connection with U.K. software maker Autonomy, which H-P acquired for $11.1 billion in October 2011. "There appears to have been a willful sustained effort" to inflate Autonomy's revenue and profitability, said Chief Executive Meg Whitman. "This was designed to be hidden." Michael Lynch, Autonomy's founder and former CEO, fired back hours later, denying improper accounting and accusing H-P of trying to hide its mismanagement. "We completely reject the allegations," said Mr. Lynch, who left H-P earlier this year. "As soon as there is some flesh put on the bones we will show they are not true." Analysts Had Questioned Autonomy’s Accounting Years Ago (CNBC) Paul Morland, technology research analyst at broking and advisory house Peel Hunt, told CNBC that he had noticed three red flags in Autonomy’s accounts in the years leading up to the HP acquisition: poor cash conversion, an inflated organic growth rate, and the categorizing of hardware sales as software. London Bankers Become Landlords as Rents Hit Record (Bloomberg) Vivek Jeswani became a landlord by accident when Deutsche Bank AG (DBK) transferred him to New York two weeks after he moved into a new home in central London. Now back in the U.K., Jeswani views the apartment in Baker Street, the fictional home of Sherlock Holmes, as one of his best assets and is about to buy another home to expand his rental business. “There are no other investments as attractive and you’ve got some security if you’ve got an asset you can use yourself,” the 36-year-old risk officer at China Construction Bank Corp.’s U.K. unit said. “There’s a good yield over 5 percent and being in central London, you’ve got demand domestically and internationally.” Trading Charges Reach SAC (WSJ) The hedge funds reaped $276 million in profits and losses avoided based on that information, criminal and civil authorities said—far dwarfing that of any previous insider-trading case. The bulk of the trading profits generated by Mr. Martoma was paid to Mr. Cohen, a person close to the hedge fund said. Fed Still Trying To Push Down Rates (WSJ) Fed Chairman Ben Bernanke suggested that the central bank will keep trying to push down long-term interest rates in 2013, as federal tax and spending policies become a more substantial headwind to the U.S. economy. "We will continue to do our best to add monetary-policy support to the recovery," Mr. Bernanke said at the New York Economic Club, answering a question about how the Federal Reserve would respond to impending spending cuts or tax increases that might restrain economic growth. 'Stiletto Surgery' alters pinky toe for better fit (Fox) These days, some women will do just about anything to fit into their favorite pair of high heels – including surgery. A growing number of women are paying thousands of dollars to surgically alter their feet just to make wearing heels a more comfortable experience. Surgical procedures such as shortening toes, receiving foot injections and even completely cutting off pinky toes are on the rise. “Unless you’ve been there, and you can’t find shoes, and you’re in pain, don’t judge,” said Susan Deming, a patient who recently underwent a toe-shortening procedure. Adoboli’s Fate Decided at Wine Bar as UBS Market Bets Unraveled (Bloomberg) On a cool late summer evening last year in London’s financial district, with the euro-zone crisis worsening and Greece tottering on the edge of default, Kweku Adoboli says he asked the three traders who worked with him at UBS AG’s exchange-traded funds desk to join him for a drink. Adoboli said in a post on his Facebook page that he needed “a miracle” as his bets on the market imploded. That night at a wine bar across the street from their office, Adoboli asked John Hughes, the senior trader on the ETF desk, and two junior traders, what to do. The others decided he should take the blame for billions of dollars in losses and an elaborate web of secret trades in what he called an umbrella account that once held $40 million in hidden profits. “I knew I was going to lose my job anyway, I had already resigned myself to that, so fair enough,” the 32-year-old Adoboli testified last month about the meeting, which the other traders deny took place. Jobless Claims in U.S. Decrease (Bloomberg) Fewer Americans filed applications for unemployment benefits last week as damage to the labor market caused by superstorm Sandy began to subside. Jobless claims decreased by 41,000 to 410,000 in the week ended Nov. 17, the Labor Department reported today in Washington. The number of applications matched the median forecast of 48 economists surveyed by Bloomberg. Soros Buying Gold as Record Prices Seen on Stimulus (Bloomberg) The metal will rise every quarter next year and average $1,925 an ounce in the final three months, or 11 percent more than now, according to the median of 16 analyst estimates compiled by Bloomberg. Paulson & Co. has a $3.66 billion bet through the SPDR Gold Trust, the biggest gold-backed exchange- traded product, and Soros Fund Management LLC increased its holdings by 49 percent in the third quarter, U.S. Securities and Exchange Commission filings show. 'Cannibal Cop' Gilberto Valle planned to to cook up 'some girl meat' on Thanksgiving (NYDN) The "Cannibal Cop" had his own twist for a Thanksgiving dinner this year — cooking up “some girl meat,” prosecutors revealed Tuesday. Gilberto Valle, 28 — who allegedly kept a database of at least 100 women he plotted to rape, cook and eat — planned the freakish feast with one of his online conspirators earlier this year, prosecutors said. “I’m planning on getting me some girl meat,” he wrote to his pal on Feb. 9. “Really tell me more,” responded the friend. “It’s this November, for Thanksgiving. It’s a long way off but I’m getting the plan in motion now,” Valle wrote.

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