Opening Bell: 05.26.10

Author:
Dealbreaker
Updated:
Jan 14, 2019
Original:
May 26, 2010

BP Reveals Crucial 'Mistake' (WSJ)
A document released to two lawmakers yesterday describes a wide array of mistakes in the fateful final hours aboard the Deepwater Horizon—but the main revelation is that BP now says there was a clear warning sign of a "very large abnormality" in the well, but work proceeded anyway, with the rig exploding two hours later.

Greek 'Death Spiral' May Make Default Unavoidable, Hanke Says (Bloomberg)
“Greece’s death spiral will end with debt restructuring or the outright default of its sovereign debt,” Hanke, also a senior fellow at the Cato Institute in Washington, wrote in an article yesterday. “While politicians and bureaucrats from the European Union, the International Monetary Fund and Greece tell us that the bailout package will defuse Greece’s time bomb, don’t believe their ‘cheerful Charlie’ chant.”

Can Geithner Unite Divided Europe? (CNBC)
And more importantly, can he beat all their 8 year-olds in a pick-up game?

Banks Trim Debt, Obscuring Risk (WSJ)
Blowing your mind: "Over the past 10 quarters, Deutsche Bank, Citi and Bank of America have lowered their net borrowings in the "repurchase," or repo, market by an average of 41% at the ends of the quarters, compared with their average net repo borrowings for the entire quarter, according to an analysis of Federal Reserve data. Once a new quarter begins, they boost those levels."

Barney Frank Names Democratic Candidates for FinReg Conferees (CNBC)
Frank, who will chair the conference, has recommended Joint Economic Committee Chairwoman Carolyn Maloney (NY), Paul E. Kanjorski (Pa.), Luis V. Gutierrez (Ill.), Melvin L. Watt (N.C.), Gregory W. Meeks (N.Y.), Dennis Moore (Kan.), and Maxine Waters (Calif.).

Qatar Eyes Treasury's Citi Stock (FT)
A person familiar with the matter said the sale of the first tranche should be completed in the coming days. People involved in the process said the QIA had been approached about buying Citi shares, but would not say by whom, highlighting the political sensitivities in such a deal.

Kerviel Says SocGen Superiors ‘Helped’ Him Make Disputed Trades (Bloomberg)
“I’m innocent,” Kerviel, 33, said in a Bloomberg Television interview yesterday outside his lawyer’s Paris office. “I want to prove to everybody that my superiors knew what I was doing and helped me to do it, to make more money for the bank.”

WaMu Shareholders Want To Investigate JPMorgan (Reuters)
Shareholders focused their investigation request on what it said was an untapped source of information -- the pre-seizure business records of Washington Mutual Inc, or WMI, and its bank. JPMorgan took control of those documents when it bought the seized bank. Shareholders said those records could contain information about JPMorgan's supposed interest in Washington Mutual Bank prior to its seizure and "intelligence about market rumors concerning WMI's financial condition that JPMC (JPMorgan) may have had a hand in generating."

IG report: Meth, porn use by drilling agency staff (AP)
SEC staffers are not alone! "Staff members at an agency that oversees offshore drilling accepted tickets to sports events, lunches and other gifts from oil and gas companies and used government computers to view pornography, according to an Interior Department report alleging a culture of cronyism between regulators and the industry. In at least one case, an inspector for the Minerals Management Service admitted using crystal methamphetamine and said he might have been under the influence of the drug the next day at work, according to the report by the acting inspector general of the Interior Department."

Dodgers Sue Jon Lovitz (AP)
The lawsuit claims Lovitz and 100 other individuals entered into a written agreement in March 2008 to buy three dugout club seats for all baseball games played at Dodger Stadium in 2008, 2009 and 2010. The lawsuit alleges the group refused to pay $95,400 for the 2010 season.

Tax Cheats Add To Greece's Nightmare (NYP)
As many as 234 of the Finance Ministry's officials haven't paid a penny in taxes since 2007 or earlier, the ministry said. Another 70 highly paid senior officials who each own homes worth an average of $1.6 million filed phony tax reports claiming relatively modest incomes of $67,000.

Steep Losses At UK Fund (HFN)
So going from $5 billion in assets under management to $300 million is bad?

Bernanke Fights More Fed Scrutiny (WSJ)
Leave Bernanke alone!

News

Opening Bell

Global Finance Chiefs At Odds (WSJ) At the annual meetings here of the International Monetary Fund and World Bank, European officials bickered about the damage caused by austerity; this week they head into a major euro-zone summit with no clear rescue plan for Greece. A territorial row between China and Japan, the world's second- and third-largest economies, bled into the conference with no sign of resolution, highlighting a new risk to growth. And many top finance officials pointed fingers at the U.S. for casting a new cloud over global markets by failing to make progress on the budget mess in the world's largest economy. Thousands March In Spain To Protest Austerity (Reuters) Several thousand anti-austerity protesters in Spain marched down a major street in the capital banging pots and pans Saturday. Many protesters also blew whistles as they blocked part of the Castellana boulevard Saturday carrying placards saying "We don't owe, we won't pay." "None of us pushed the banks to lend huge sums of money to greedy property speculators, yet we are being asked to pay for other's mistakes," 34-year-old civil servant Maria Costa, who was banging an old pot along with her two children, said. Bernanke Defends Fed From Claims It Is Being Selfish (NYT) Critics say the Fed’s unorthodox policies weaken the dollar and bolster the currencies of developing countries, hurting their ability to export. “It is not at all clear that accommodative policies in advanced economies impose net costs on emerging market economies,” Mr. Bernanke said at an event sponsored by the Bank of Japan and the International Monetary Fund. The Fed last month announced a program of open-ended bond purchases that will be continued until there is substantial improvement in labor market conditions, barring a sustained and unexpected spike in inflation. To start off, the central bank will buy $40 billion in mortgage-backed securities each month. “This policy not only helps strengthen the U.S. economic recovery, but by boosting U.S. spending and growth, it has the effect of helping support the global economy as well,” Mr. Bernanke said. Fischer Backs Fed QE3 as World ‘Awfully Close’ to Recession (Bloomberg) While there has been “a lot of progress made” to improve the global economy, its impact hasn’t materialized, Fischer said in an interview in Tokyo with Bloomberg Television airing Sunday. He signaled that by deciding not to set an end date or total amount to its third program of bond buying, the Fed is easing worries it will run out of ammunition before achieving its goals. Can Morgan Stanley's Gorman Save Wall Street? (BV) Gorman’s strategic moves are enough to convince one natural born skeptic, Mike Mayo, a financial-industry research analyst at Credit Agricole SA (ACA), to recommend Morgan Stanley’s stock for the first time in years. “The stock is valued as if it is a Greek or Spanish bank but its risk is far less,” he wrote in an e-mail to me. For Morgan Stanley to return to its glory days, he said, margins need to be improved in asset management, fixed-income trading needs to be further slimmed down and the core investment-banking franchise needs to be maintained and reinvigorated. Good advice. A firm built around lower risk-taking and lower overall pay while still providing clients with the advice and capital they need to innovate and expand is what we need on Wall Street. It’s the vision of one man taking seriously his responsibility to make the capital markets safe and productive for economies all over the world, instead of just some casino gone haywire where the house absorbs the losses and the profits go to the gamblers. The question is whether other leaders on Wall Street will follow Gorman’s example. Sex Life Was ‘Out of Step,’ Strauss-Kahn Says, but Not Illegal (NYT) More than a year after resigning in disgrace as the managing director of the International Monetary Fund, Dominique Strauss-Kahn is seeking redemption with a new consulting company, the lecture circuit and a uniquely French legal defense to settle a criminal inquiry that exposed his hidden life as a libertine...In France, “Libertinage” has a long history in the culture, dating from a 16th-century religious sect of libertines. But the most perplexing question in the Strauss-Kahn affair is how a career politician with ambition to lead one of Europe’s most powerful nations was blinded to the possibility that his zest for sex parties could present a liability, or risk blackmail. The exclusive orgies called “parties fines” — lavish Champagne affairs costing around $13,000 each — were organized as a roving international circuit from Paris to Washington by businessmen seeking to ingratiate themselves with Mr. Strauss-Kahn. Some of that money, according to a lawyer for the main host, ultimately paid for prostitutes because of a shortage of women at the mixed soirees orchestrated largely for the benefit of Mr. Strauss-Kahn, who sometimes sought sex with three or four women. German finance chief Wolfgang Schaeuble says Greece won't default or exit (Telegraph) "Greece has to take a lot of very serious reforms" and "everyone is trusting that the Greek government is doing what is necessary", he said at a meeting with business leaders in Singapore on Sunday. Mr Schaeuble said an increasing majority of Greeks understand that being in the euro "is in the best interest of Greece" and said did not think there would be a ‘staatsbankrott’ - or state bankruptcy. He said he did not see “any sense to speculate on Greece leaving the euro” because it would be very damaging for both the country and the region. High-Speed Trading No Longer Hurtling Forward (NYT) Profits from high-speed trading in American stocks are on track to be, at most, $1.25 billion this year, down 35 percent from last year and 74 percent lower than the peak of about $4.9 billion in 2009, according to estimates from the brokerage firm Rosenblatt Securities. By comparison, Wells Fargo and JPMorgan Chase each earned more in the last quarter than the high-speed trading industry will earn this year. Titanic Tycoon Plans Stake Sale Talks for $8 Billion Gas Project (Bloomberg) Australian mining magnate Clive Palmer, who’s planning to build a modern replica of the Titanic, aims to start talks next year to sell stakes in a potential $8 billion natural gas project in Papua New Guinea. “We’ve had interest from major petrochemical companies who want to joint venture” including Exxon Mobil Corp. and Chinese companies, Palmer said in an interview. “We will talk to them at the appropriate time,” likely mid-2013 when field work is scheduled to be completed, he said. Occupy Supporters Stage Protest in London (AP) Several supporters of the anti-corporate Occupy movement chained themselves to the pulpit of St. Paul’s Cathedral during a service on Sunday in an action for the anniversary of its now-dismantled protest camp outside the London landmark. The dean of St. Paul’s, David Ison, said he was conducting an evening prayer service when “four young women dressed in white” chained themselves to the structure. Dutch make massive cocaine bust in fruit shipment headed for zoo, arrest five (AP) A major cocaine seizure in Europe turned out to be good news for the animals at Rotterdam’s zoo. The drugs were hidden among boxes of bananas, and the fruit went to the monkeys and other creatures at the Blijdorp zoo. Dutch prosecutors said Friday more than eight tons of cocaine was hidden among the bananas on a ship from Ecuador. The drugs were seized Monday in the Belgian port of Antwerp, while the bananas were allowed to continue on to Rotterdam – the shipment’s final destination. Dutch police arrested a Belgian truck driver and four Dutch men on Tuesday.

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