Opening Bell: 10.08.10

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Greenspan Says US Creating 'Scary' Deficit By Borrowing (Bloomberg)
“We’re involved in a dangerous game,” Greenspan said yesterday at a foreign-exchange conference. “We’re increasing the debt held by the public at a pace that is closing” the gap between our debt and “any measure of borrowing capacity,” Greenspan said. “That cushion is growing very narrow.”

Larry Wilcox, "CHiPs" Actor, Charged with Securities Fraud (CBS)
The scheme involving Wilcox was one of several kickback operations run by more than a dozen small-company stock promoters, the Securities and Exchange Commission said Thursday. The SEC charged Wilcox and the others in lawsuits filed in Miami federal court. The SEC says the promoters were caught in an FBI undercover sting operation offering to pay kickbacks to pension-fund managers or stockbrokers for using their clients' funds to buy penny stocks.

Cleveland Browns Owner Claims Hedge Fund Is Hiding His Money (Forbes)
Randy Lerner, the owner of the Cleveland Browns and the Aston Villa Football Club, is embroiled in a lawsuit over his October attempt to redeem $40 million from a hedge fund run by two sisters and a recent Republican Congressional candidate. In legal papers, Lerner claims the funds have been “hidden.”

Money Manager Who Crashed Plane Gets 10 Years (AP)
Hamilton Superior Court Judge Steven Nation sentenced Marcus Schrenker, who conned friends into investing in a fund that didn't exist and tried to fake his death by parachuting out of a plane and crashing it when the scheme started to unravel, to 10 years in prison, ignoring Schrenker's claims that a lighter sentence would give him enough time to make things right. Schrenker, 39, told Nation he wanted to repay investors and rebuild his relationship with the three children he's seen only once since his arrest. He said he has bipolar disorder and had got caught in a downward spiral of stress after becoming addicted to painkillers.

Soros Says Banking System Remains "Too Connected" (Reuters)
"We didn't grasp the real problems" in the financial regulation bill, Soros said at a Financial Times conference. Soros argued that the banking system is too compartmentalized and added he doesn't see what has been done to solve that issue. "One thing you have to recognize is that markets are inherently unstable, and maintaining stability has to be the objective of financial authorities," Soros said. "I think things have really gotten out of control and they have not been brought under control by what we've done so far."

Finance Leaders To Try And End Currency Wars (Reuters)
"What we all want is a rebalancing of the global economy and this rebalancing cannot happen without ... a change in the related value of currencies," IMF Managing Director Dominque Strauss-Kahn said.

Obama May Try to Woo Business as P&G, Blackstone Vent (Bloomberg)
“I have every expectation as we go through the next several months that we are going to see a greater involvement with business than we have seen in some time,” said Tom Daschle, the former Senate Democratic leader and an Obama ally.

More Taxes In Finance, European Commission Says (NYT)
According to the commission, the financial sector is not taxed enough, and should be expected to take some responsibility for the crisis, and its institutions benefited greatly from subsequent government interventions.

Economy Sheds 95,000 Jobs; Rate at 9.6% as Easing Looms (Reuters)
Nonfarm payrolls dropped 95,000, the Labor Department said on this morning. Private employment increased 64,000 after rising 93,000 in August. A total of 77,000 temporary jobs for the decennial census were terminated last month.

Stimulus Checks Sent To Dead, Incarcerated (WSJ)
The Social Security Administration sent about 89,000 stimulus payments of $250 each to dead and incarcerated people—but almost half of them were returned, a new inspector-general's report found. The agency was charged with distributing the one-time payments, worth about $13 billion in total, as part of the economic-stimulus package passed in February 2009.

Carlyle Betting Patience Will Pay For India Investment (Reuters)
"We hope to deploy a sizeable amount of capital in the market. We have a $2.5 billion fund which still has a lot of dry powder," said Devinjit Singh.

HSBC Told To Improve Oversight (WSJ)
The orders give the board of HSBC North America Holdings Inc., based in New York, 30 days to submit a plan to strengthen the unit's oversight of business risk management. The HSBC operation was ordered to "employ a permanent full-time" regional compliance officer for risk management. HSBC also must retain an outside consultant approved by the Fed to review the unit's compliance program.

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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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