It's all Goldman Sachs' fault says Matt Taibbi

[Jan Klimkowski]

Interesting. I wonder what's up there?

The Italian economy is a complete mess. However, the credit ratings agencies and financial "correspondents" have focused so far on the problems of the countries they call the "PIGS": Portugal, Ireland, Greece and Spain.

My suspicion is that the elite sharks can make a lot of money pumping up Italian debt as secure, persuading pension funds, small investors and fools to buy it up, and then rake in huge profits as it collapses.

In other words, for the Big Players, the margins of profit (theft) are greater in Italy because its fundamental economic problems are not as high profile as those of the PIGS.

"Dark pools" are one of the facts that demonstrates that the claim that global market capitalism is TRANSPARENT AND EFFICIENT is in fact a Big Lie.

"Dark pools" are by definition OPAQUE AND INEFFICIENT.

They are also a place where the moves of the Big Players can first be identified.

[Magda Hassan]

June 27, 2011 8:17 AM EST

A day of confusion in trading in bank shares on the Italian stockmarket on Friday has raised concerns that the euro crisis is taking a new direction.
Media reports said investors across Europe were shaken when shares of Italian banks including giants, UniCredit and Intesa Sanpaolo, fell sharply on concerns about their capital positions.

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The Financial Times reported:
"Shares in Italian banks recorded heavy falls in trading on Friday prompting the stock market regulator to open an inquiry into stop-loss orders that may have triggered a sell off.
"Shares in UniCredit, Intesa Sanpaolo, Banco Populaire, UBI Banca and Banca Monte dei Paschi di Siena were briefing suspended after they fell 10 per cent (the limit they are permitted to fall) around 1000 GMT after starting the session in positive territory." (That's around 6 pm Friday, Sydney time.)



Intesa Sanpaolo closed down more than 4% while UniCredit lost more than 5% on the day. Investment bank, Mediobanca, the most powerful of all Italy's financial groups, lost 4%.
It has tentacles through the Italian economy in banking finance, insurance, the media, manufacturing and food.
Shares in Popolare Milano, Italy's oldest Italian cooperative bank, plunged 15% last week to the lowest since at least 1989.
Banca Monte dei Paschi di Siena was one of the biggest losers over the week (it has also been one of the weaker big banks in the past couple of years), losing 11.4% by the close on Friday.
That was the biggest fall in a year for the bank.
Market reports said the trading pause was brief, but yields on Italian government bonds surged, sparking fear that the eurozone's debt troubles could be spreading.
And, the spread between Italian and German 10-year bonds hit 212 basis points - their highest level since the creation of the euro.
The news worried markets in Europe and the US.
In London shares in Lloyds Banking Group Plc, Britain's biggest mortgage lender, fell 10% last week and those of the Royal Bank of Scotland Group dropped 12% after the head of The Bank of England, Sir Mervyn King, warned the eurozone crisis was the biggest threat to the UK financial system's stability.
And Wall Street's 1% fall was linked directly to the news from Italy.
Italy's market regulator opened an investigation into stop-loss orders executed on the shares of the banks, according to reports.
The regulator, Consob, will also monitor trading on the Milan exchange in the coming days.
Stop-loss orders are placed with brokers to sell stocks when they reach a certain price and are designed to protect profits that have already been made or prevent further losses.
Some London and US reports said over the weekend the stop loss orders and associated falls may have been linked to a warning from ratings group Moody's late Thursday, that many Italian banks faced possible ratings downgrades because of their exposure to Italian sovereign risk.
Moody's put the long-term debt and deposit ratings of 16 Italian banks and two Italian government-related financial institutions on review for possible downgrade.
It also changed the outlook to negative from stable on the long-term debt and deposit ratings of a further 13 Italian banks.
A week earlier Moody's had warned that it could downgrade Italian sovereign debt in the next three months on concerns about eurozone contagion from Greece.
Italy has government debt which will reach 120% of the size of the economy (as measured by GDP) by the end of this year.
The government has started work on a new austerity plan that could cut billions of euros of spending over the next five years.
Italian banks reportedly have more than 150 billion euros of Italian government debt.
Insurers (naturally) are also big holders as well, such as the giant Generali which held around 47 billion euro of debt at the end of last year.
The Italian government debt market is the third largest in the world, so doubts about the creditworthiness of the country are concerned matter to investors.
http://au.ibtimes.com/articles/169676/20...-worry.htm

[Jan Klimkowski]

Magda - yes, it's absolutely clear.

The banks/institutions being manipulated earlier this week in Goldman's "dark pools" included: Banca Monte dei Paschi di Siena, Unicredit and Intesa Sanpaolo.

[Jan Klimkowski]

Italy on the brink:

Europe

Scrambles To Deal With Italy Contagion Fallout, Calls Emergency Meeting As Former ECB Official Says "Very Worried About Italy"

Submitted by Tyler Durden on 07/10/2011 10:34 -0400

As was reported last week, Europe has suddenly found itself shocked, shocked, that the bond vigilantes decided to not pass go and go directly to the purgatory of the European core, in the form of the country that, at €1.5 trillion euros, has more debt than even Germany, but far more importantly, has a debt/GDP ratio of over 100%, and has the biggest amount of net notional CDS outstanding (not to mention that it has dominated Sigma X trading for the past several weeks). Italy.

European Rescue Fund Insufficient To Rescue Italy, May Be Doubled To Over $2 Trillion

Submitted by Tyler Durden on 07/10/2011 13:11 -0400

The latest italy contingency stunner comes from Die Welt which has just reported that the European rescue fund will be insufficient to bail out the latest biggest loser in the game of musical ponzi chairs, Italy.

As Reuters translates: "The existing rescue fund in Europe is not sufficient to provide a credible defensive wall for Italy," the central bank source was quoted telling the newspaper in an advance text of an article to appear on Monday. "It was never designed for that," the source added." The newspaper said that the rescue fund might have to be doubled to up to 1.5 trillion euros. But it was not clear if it was the central bank source calling for the increase."

Doubling the bailout fund is not a new idea and was previously proposed by Nout Wellink of the Dutch Central Bank, although as Die Welt explains, the decision will ultimately be not that of the ECB but of the separate governments. Germany, as a reminder, is already the biggest backstopper of Europe, and is on the hook for €211 billion euros as the primary funder of the EFSF: which just happens to be the CDO at the heart of the eurozone.

Should Germany have to add another 200 billion euros to its rescue commitment, Merkel can forget any and all reelection chances, which is funny since just today it was announced that "Chancellor Angela Merkel has stated publicly that she wishes to run again in 2013. This comes as polls show she would face strong challengers from the opposition Social Democrats." Her chances would be roughly zero if German taxpayers learn that the fate of a failed monetary experiment is increasingly more reliant on their direct labor even as the populations of "austere" countries refuse to work and merely subsist on existing entitlements.

[Jan Klimkowski]

Whilst Greece gets downgraded to DEFAULT by the ratings agencies, the vulture speculators are gnawing on Italy:

Italy Cancels August Bond Auction

Submitted by Tyler Durden on 07/25/2011 12:42 -0400

Citing the most hilarious explanation we have ever heard for not daring to approach the capital markets, Dow Jones reports that following a comparable announcement from Austria earlier, none other than clutch euro Domino Italy, whose bond yields surged by about 40 bps today, has decided to take a sabbatical from accessing capital markets, and will not issue medium and long-term bonds in August.

Of course, the real reason is that the spreads are prohibitively high but that's a story for another reason.

The problem for Italy, however, is that it will end up burning through a lot of cash over the next 45 days and then far more will depend on the successful passage of the country's auctions in the following month, when the next scheduled medium term auction is on September 13 (full auction schedule is here).

Amusingly, while all of Europe complains that the Greece, Ireland and Portugal have no capital markets access, some of the better of PIIGS make the voluntary decision to avoid price discovery. We fail to see how this can possibly result in anything than another loss of credibility in the eurozone rescue package.

[Jan Klimkowski]

The self-appointed financial correspondents opine: "Italy is too big to bail."

Nah, the piranha speculators are ready to gorge on yet more taxpayer bailout money:

Italy calls emergency meeting as eurozone crisis resurfaces

A fresh wave of eurozone panic prompted Italian authorities to call an emergency meeting on Tuesday and Spain's prime minister to delay his holiday as borrowing costs for the two nations hit fresh highs.

By Szu Ping Chan4:24PM BST 02 Aug 2011

Italy's economic and finance minister Giulio Tremonti is due to meet officials from the Bank of Italy and market regulators less than two weeks after ministers agreed a €159bn (£140bn) second bail-out for Greece.

Concerns that Spain and Italy will be the next victims of the eurozone crisis drove benchmark bond yields to all-time highs and unsettled stock markets.

Yields on 10-year Spanish government bonds touched 6.426pc at one point, while Italy's 10-year bonds also hit highs of 6.219pc -edging closer to the 7pc levels that forced its smaller Greek and Portuguese neighbours to ask for a bail-out.

Mr Tremonti is also due to speak with EU commissioner Olli Rehn, later today and will meet eurogroup chairman Jean-Claude Juncker in Luxembourg on Wednesday for further discussions.

With Europe's politicians on summer break, analysts said markets were renewing their fears that Europe's aid package for Greece and other bailed-out nations was not enough to prevent wider contagion.

"This has all the features of a self-fulfilling crisis," Harvinder Sian, a senior bond strategist at Royal Bank of Scotland, told Bloomberg. "The rise in yields looks pretty relentless, and it doesn't look as if the politicians are anywhere near to getting ahead of the curve."

The events forced Spanish prime minister Jose Luis Rodriguez Zapatero to delay his planned three-week holiday so he could keep a closer eye on the unfolding crisis.

European stock markets were also heavily hit by the uncertainty. Italy's benchmark FTSE Mib stock index dropped 1.5pc to a 27-month low of 17,463.92, while bourses in London, France and Germany followed Asian markets lower, falling around 0.6pc.

Analysts are now looking to see how the two countries could prevent the eurozone crisis escalating to the next level.

Italy is particularly viewed as 'too big to bail' because of its giant debt to GDP ratio - the highest of any eurozone country except Greece.

"Perhaps Italy will have to look at the funds available through the European Financial Stability Facility (the eurozone's bail-out fund), and maybe on Italy's part they will have to announce some further austerity measures, but of course that will take time," said Charles Jenkins, director for Western Europe at the Economist Intelligence Unit.

Italy has already pushed through a €48bn package of austerity measures in an attempt to reach a balanced budget by 2014.

Its central bank recently forecast the country's gross domestic product would grow by 1.1pc next year, less than the government's previous estimate of 1.3pc growth.

[Jan Klimkowski]

Via Zero Hedge.

It appears that the Germans are likely to refuse to bail out Italy, and the Chinese won't buy Italian bonds unless Italy is bailed out....

The opening of Asian, European and then American markets may be spectacular.

It Just Went From Bad To Far, Far Worse As Germany Says Italy Is Too Big For EFSF To Save, Refuses To Carry Euro Bailout Burden
Submitted by [URL="http://www.zerohedge.com/news/it-just-went-bad-far-far-worse-germany-says-italy-too-big-efsf-save-refuses-carry-euro-bailout-"]

Tyler Durden [/URL]on 08/06/2011 12:20 -0400

Remember when we said (yesterday) that Germany will soon balk over the fact that it is pledging its entire economy to bail out an insolvent Europe? Well, that moment has come.

Dow Jones just hitting the tape referencing Spiegel

German Govt: Italy Too Big For EFSF To Save - Spiegel
German Govt: Doubts Whether Tripling EFSF Would Help It Save Italy
German Govt: Italy Must Make Savings, Reforms To Exit Crisis - Spiegel
Italy Debt Guarantee Could Raise Doubts Over Germany's Finances - Spiegel
German Govt: EFSF Should Only Help Small, Mid-Size Countries - Spiegel
As a reminder, yesterday's stopgap announcement by the ECB to expand its SMP purchases of secondary market Italian and Spanish bonds was merely as a precursor to full EFSF monetization until its comes fully online in September (or sooner) in a vastly expanded format (between €1.5 and €3.5 trillion).

If Germany is now against this, which appears to be the case, it pretty much means, well, game over.

Add the uncerainty over the unwind of the Europe rescue "gamechanger" as one of the more naive CNBC anchors said yesterday, and Monday is now guaranteed to be a bloodbath.

As for those saying China will gladly step in and fund a $5 trillion EFSF shortfall, they may want to read the following article from Reuters:

Italian Economy Minister Giulio Tremonti said on Thursday that Asian investors are reluctant to buy Italian bonds because it sees they are not being bought by the European Central Bank.

Speaking at a news conference, Tremonti also said it would be desirable for the central bank to follow the lead of the Japanese and Swiss central banks in taking expansionary steps to tackly the euro zone's crisis.

"I note that the Bank of Japan today launched quantitative easing and the Swiss cen bank cut rates to zero, we are waiting for decisions if possible, but desirable (from the ECB)," Tremonti said.

When you talk to Asia they say: "We don't understand what Europe is," he continued. "The second point is that they say 'if your central bank doesn't buy your bonds, why should we buy them"?

[Jan Klimkowski]

As if to prove that Goldman Sachs is now entirely shameless about its raison d'etre - namely to ensure that GS's speculation, looting and bad bets are compensated by the taxpayer through Central Banks - we have this:

"Italian government bonds are fundamentally attractive"

Goldman Scrambles To Tell ECB What To Say Later Today

Submitted by Tyler Durden on 08/07/2011 13:34 -0400

As expected, Goldman, who came up with the promptly imploding plan of using the EFSF as a EUR rescue mechanism, is now scrambling to come up with yet another Eurozone rescue plan.

Below is the full text of what Francesco Garzarelli just released as a prompt to Trichet. Gone are the days of nuance: the note is titled brutally enough Europe Should Say That BTPs Are Cheap'.

Just in case anyone is confused of course. We expect the ECB head to pretty much read from this note to "clients" verbatim.

In a nutshell, Goldman's view is that, "Italian government bonds are fundamentally attractive, but we have reached a point where only the European authorities can credibly signal this is the case. Secondary bond market purchases by the ECB are needed to stabilize markets in the near term. The 10-yr BTP spread to Bunds could fall back to around 200-250bp in such a scenario." Sure. It will work. For a week or so. Then what?

Full Goldman note: can be seen at Zero Hedge.

[Ed Jewett]

World Collapse Explained in 3 Minutes

http://www.youtube.com/watch?v=NOzR3UAyX...r_embedded

[Ed Jewett]

Press Release

Release Date: September 1, 2011

For immediate release

The Federal Reserve Board on Thursday announced a formal enforcement action against the Goldman Sachs Group, Inc. and Goldman Sachs Bank USA to address a pattern of misconduct and negligence relating to deficient practices in residential mortgage loan servicing and foreclosure processing involving its former subsidiary, Litton Loan Servicing LP.

Goldman Sachs sold Litton to Ocwen Financial Corporation on September 1, 2011 and has ceased to conduct residential mortgage servicing. Litton is the 23rd largest mortgage servicer in the United States.

The action orders Goldman Sachs to retain an independent consultant to review foreclosure proceedings initiated by Litton that were pending at any time in 2009 or 2010. The review is intended to provide remediation to borrowers who suffered financial injury as a result of wrongful foreclosures or other deficiencies identified in a review of the foreclosure process. The foreclosure review will be conducted consistent with the reviews currently underway at the 14 large mortgage servicers that consented to enforcement actions brought by the banking agencies on April 13, 2011.

If Goldman Sachs re-enters the mortgage servicing business while the action is in effect, it will be required to implement enhanced corporate governance, risk-management, compliance, borrower communication, servicing and foreclosure practices comparable to what the 14 mortgage servicers are implementing.

As noted in the April press release, the Federal Reserve believes monetary sanctions are appropriate and plans to announce monetary penalties. These monetary penalties against Goldman Sachs will be in addition to the corrective actions that Goldman Sachs will be taking pursuant to today's action. Goldman Sachs has acknowledged in today's action that it will be responsible for satisfying any civil money penalty that the Board of Governors could have assessed against Litton for its conduct.

For media inquiries, call 202-452-2955.

Attachment (1.46 MB PDF)

2011 Enforcement Actions

Last update: September 1, 2011

http://www.federalreserve.gov/newsevents...10901b.htm