How Paulson Gave Hedge Funds Advance Word (Bloomberg Markets)
On the morning of July 21, 2008, before the Eton Park meeting, Paulson had spoken to New York Times reporters and editors, according to his Treasury Department schedule. A Times article the next day said the Federal Reserve and the Office of the Comptroller of the Currency were inspecting Fannie and Freddie’s books and cited Paulson as saying he expected their examination would give a signal of confidence to the markets. At the Eton Park meeting, he sent a different message, according to a fund manager who attended. Over sandwiches and pasta salad, he delivered that information to a group of men capable of profiting from any disclosure. Around the conference room table were a dozen or so hedge- fund managers and other Wall Street executives -- at least five of them alumni of Goldman Sachs, of which Paulson was chief executive officer and chairman from 1999 to 2006. In addition to Eton Park founder Eric Mindich, they included such boldface names as Lone Pine Capital LLC founder Stephen Mandel, Dinakar Singh of TPG-Axon Capital Management LP and Daniel Och of Och-Ziff Capital Management Group LLC. After a perfunctory discussion of the market turmoil, the fund manager says, the discussion turned to Fannie Mae and Freddie Mac. Paulson said he had erred by not punishing Bear Stearns shareholders more severely. The secretary, then 62, went on to describe a possible scenario for placing Fannie and Freddie into “conservatorship” -- a government seizure designed to allow the firms to continue operations despite heavy losses in the mortgage markets. Paulson explained that under this scenario, the common stock of the two government-sponsored enterprises, or GSEs, would be effectively wiped out. So too would the various classes of preferred stock, he said. The fund manager says he was shocked that Paulson would furnish such specific information -- to his mind, leaving little doubt that the Treasury Department would carry out the plan. The managers attending the meeting were thus given a choice opportunity to trade on that information.
Corzine Pushed Bet On Euro Debt To $11.5 Billion (Bloomberg)
Was that wrong?
Money Found In Britain May Belong To MF Global (Dealbook)
About $200 million in customer money that vanished from MF Global is believed to have surfaced at JPMorgan Chase in Britain, according to people briefed on the matter. The discovery could be the most significant breakthrough in a monthlong hunt for the missing funds...The authorities believe MF Global failed to give JPMorgan full documentation for the cash, the people briefed on the matter said. But the bank’s concerns hardly mattered because the money had already been transferred to the account in Britain. It is unclear whether investigators can recover the $200 million.
Jim Rogers: Gold Due For Correction (CNBC)
"I own gold and I'm not selling my gold," Rogers said, but pointed out that the price of the commodity has been up for 11 years in a row. He advised that a drop in price wouldn’t be such a bad thing. "Somewhere down the line gold will have a correction. Gold will continue to do what gold does best. Just give it a chance." If the gold price retreats towards $1,200 per ounce, Rogers said he would get "extremely excited."
S&P May Cut France Rating Outlook (Reuters, related)
Economic and financial daily La Tribune said S&P -- which on Friday cut Belgium's credit rating to AA from AA+ -- had planned to make an announcement on France the same day but postponed it for unknown reasons. "It could happen within a week, perhaps 10 days," La Tribune quoted a diplomatic source as saying of a change to the outlook.
Vermont Artist: I'll fight Chick-fil-A for my kale (AP)
A folk artist expanding his home business built around the words "eat more kale" says he's ready to fight root-to-feather to protect his phrase from what he sees as an assault by Chick-fil-A, which holds the trademark to the phrase "eat mor chikin." Bo Muller-Moore uses a hand silkscreen machine to apply his phrase, which he calls an expression of the benefits of local agriculture, on T-shirts and sweatshirts. But his effort to protect his business from copycats drew the attention of Chick-fil-A, the Atlanta-based fast-food chain that uses ads with images of cows that can't spell displaying their own phrase on message boards. In a letter, a lawyer for Chick-fil-A said Muller-Moore's effort to expand the use of his "eat more kale" message "is likely to cause confusion of the public and dilutes the distinctiveness of Chick-fil-A's intellectual property and diminishes its value."
Citi Says Euro Crisis To Escalate (CNBC)
The crisis in the euro zone will escalate in 2012, economists at Citi said on Tuesday, sending the countries that share the euro into recession next year and resulting in no more than “modest but sustained growth in the U.S. and still relatively strong – albeit slowing – growth in Asia." In its sixth consecutive monthly downgrade, Citi cut its 2012 global growth forecast and now expects global growth to slow from 4.2 percent in 2010 and about 3.0 percent in 2011 to 2.5 percent in 2012. For 2013, it expects “a modest reacceleration in global growth”, to 3.1 percent. “The hangover from the pre-recession credit boom will continue to cast a deep shadow across industrial country growth in 2012 and beyond," Citi said in a note.
Citi Ruling Could Chill SEC, Street Legal Pacts (WSJ)
"Judge Rakoff's decision will likely be troubling to the entire federal government, and not just the SEC," said Mr. Grundfest, who from 1985 to 1990 was a commissioner at the agency. "By his logic, it's hard ever to support any settlement without a trial. So, will the federal courts be jammed with trials so that judges can know the 'truth' because they are unwilling to accept allegations negotiated in the shadow of a trial?"
Syria Says Sanctions Are ‘Economic War’ (Bloomberg)
Syrian Foreign Minister Walid al- Muallem called the Arab League’s sanctions against his country a declaration of “economic war” as a United Nations human-rights panel said Syrian forces had committed crimes against humanity.
American Airlines Parent AMR Corp. Files for Bankruptcy (Bloomberg)
With the filing, American became the final large U.S. full- fare airline to seek court protection from creditors. The Fort Worth, Texas-based company, which traces its roots to 1920s air- mail operations in the Midwest, listed $24.7 billion in assets and $29.6 billion in debt in Chapter 11 papers filed today in U.S. Bankruptcy Court in Manhattan.
Police: Walmart Pepper-Spraying May Have Been Self-defense (KLTA)
Authorities say it was unclear exactly what sparked the confrontation, but it appeared to be a case of "competitive shopping." One witness said screams erupted after about 100 people waiting in line to snag Xbox gaming consoles and Wii video games got into a shoving match. YouTube video taken inside the store shows a crowd of anxious customers trying to get to the merchandise. LAPD Detective Michael Fesperman says the woman, caught in the rush for video-game consoles, may have feared for her life. "There was a stampede at Walmart from people getting Xbox games for half off," he said. "There was no control. People were getting stampeded and trampled. There were people screaming, yelling that they were being trampled or crushed. "This woman may have fired her pepper spray in self-defense," Fesperman said.