FBN’s Charlie Gasparino reports that a congressional subcommittee investigating the recent implosion of the $3 trillion muni bond market wants banking analyst Meredith Whitney to come clean and explain her doomsday prediction of a wave of defaults by states, cities, towns and borrowers. Whitney’s pronouncements on municipal bonds have been blamed for some of the shakiness in that particular market.
As part of this inquiry, the subcommittee is looking into the validity of Whitney’s call made on national television that predicted between 50 and 100 major municipal bond defaults over the coming year, that would cost investors hundreds of billions of dollars in losses.
Many small investors unloaded their bonds, and redeemed shares of municipal bond mutual funds, at a loss.
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What a joke! Any yokel who reads financial news knows municipalities are in serious financial doo-doo. Meredith just stated the obvious, which pissed off the muni traders, who in turn rattled the cages of their bought and paid for representatives in Congress. The United States of America is in a very sad state.
Croesus Watch: Banker Pay Levitates to New Highs
My pet joke from the dot bomb era scandals is now looking a bit tired:
If you steal $1000 from the local convenience store, you go to jail for ten years. If you steal $100 million, you get called before Congress and get called bad names for ten minutes.
You need to add at least another zero to the amount you need to steal before Congress can even be bothered to take notice.
Seriously, thought, this is just continued looting. The profits the banking industry is showing is heavily dependent on government subsidies: super low interest rates, regulatory forbearance, and its kissing cousin, dubious accounting (for instance, a lot of banks have been underreserving). So these are not in any normal sense private sector profits, yet we allow the banking industry to maintain that they are and pay a ton of these fictive returns out rather than retaining them to bolster their equity bases.
The best methods to induce a real change in values would be criminal prosecutions, barring lesser miscreants from the industry for life (and we don’t mean young insider traders, but business unit managers for more complex abuses), and measures that come closer to approximating unlimited liability, like clawbacks (if someone who leaves his firm with a big hole in its balance sheet can have pretty much all of his tangible wealth seized, that might focus a few minds).
Meredith Whitney can easily be accused of promulgating a “bear raid”. A bair raid is the illegal practice of attempting to push the price of a investment lower by taking large short positions and spreading unfavorable rumors about the target investment, in this case muni bonds. May the SEC hang her high and may she twist slowly in the wind.
“Meredith Whitney can easily be accused of promulgating a “bear raid”. A bair raid is the illegal practice of attempting to push the price of a investment lower by taking large short positions and spreading unfavorable rumors about the target investment, in this case muni bonds.”
Speaking of legal issues: you have some proof she took on Short positions?
If not…and I were her? I’d sue your silly ass. Btw, how does one misspell “bear” with an a and an i? A Sheila Bair?
Have you always been a parochial clown?
Oh … so its a crime against the ‘state’ now to say anything that might hurt the gov/corporation profits.
F… the corp state.
The U.S. has sunk to be no better than yet another despotic regime ruled by a oligarchs using force and propaganda to stay in power.
Celente is right, there’s a word for this …FASCISM
Celente finally catching up to farang, eh?
Seems some of us were calling Greenspan’s tactics of 2001 a strategy of a resulting Weimar Dollar…back in 2001.
Seems some of us were labeling Fascist tactics fascism way back “before it was cool.”
I don’t charge like Gerald, he is very astute….but you’ll need to stay alert to keep up with farang. Very alert.
The time for action is coming up on the horizon….for those with ears to hear.