Gold Closes Above $800 at Highest Level Since 1980
November 3rd, 2007Via: MarketWatch:
Gold futures rallied Friday to close above $800 at their highest level in nearly 28 years, boosted by rallying crude-oil prices and the dollar’s tumble to a new record low against the euro.
Gold for December delivery rallied $14.80 to finish at $808.50 an ounce on the New York Mercantile Exchange. Earlier, the contract hit an intraday high of $810.70, a level not seen since 1980.
The record high for Nymex gold was $875 set on Jan. 21, 1980, and the record settle was $825.50 set on the same date.
…
“Gold had already regained its footing overnight, as fresh dollar selling emerged once again after yesterday’s feeble attempt at a rally,” said Jon Nadler, an analyst at Kitco Bullion Dealers, in a research note.
“The metal’s powerful surge is reflective of growing apprehensions that something, somewhere in the global financial system might go awry, despite interest rate maneuvers designed to keep things going,” Nadler said.
CITI FACING LIQUIDITY CRISIS
November 2nd, 2007Via: Business Week:
For all its financial might, Citigroup (C) is undercapitalized according to some Wall Street analysts sounding fresh alarms about the banking behemoth’s balance sheet. Citigroup shares tumbled nearly 7% on Nov. 1 after three analysts downgraded the company’s stock.
Citigroup’s tangible capital is 2.8% of assets, just over half the industry average of 5%, according to Meredith Whitney, a bank analyst with CIBC (CM) World Markets. “They don’t have enough capital, pure and simple,” Whitney says. “They will have to address that, ASAP.” She downgraded the stock on Oct. 31 to sector under performer from sector performer. A Citi spokesman declined to comment on the report or on the issues it raised.
Unloading Toxic Waste Mortgage Backed Securities: “We Americans Were Very Clever”
November 2nd, 2007We’ll see how clever they are when the Good Fellas show up to collect.
At some point, this thing is going to start looking less like a financial crisis and more like a mob war.
How do I know?
Because I got a job that resulted from a decapitation strike against the computer systems of a wholly owned subsidiary of a Wall Street firm that was heavily involved with generating subprime loans and selling the resulting mortgage backed securities.
I haven’t talked about this before in public, but a core Cryptogon contributor wondered if the organizations that wound up with the toxic waste paper would eventually attempt to settle the score in a less than pleasant manner, if you know what I mean…
I wrote a candid response to him because I’ve wanted to tell this story many times, but was afraid to do it here on Cryptogon. After reading about this smug prick, Lawrence Lindsey, in the GATA piece below, I decided to share with all of you what I’ve seen happen to some other smug pricks who thought they were very clever too.
This was my private response to the Cryptogon reader-contributor. I’ve edited the message just slightly for length and readability:
I can’t post this publicly.
You’ve probably figured out by now the name of the firm I’ve been
referring to in the Wall Street Chop Shop piece, and a certain other
post… I’m not explicitly saying it, but people who have been following
this probably get it.
Yes, they even dress like mobsters, and wear the pinky rings.
But here’s a story that I’m afraid to talk about in public.
I and several other IT guys were brought into that company to handle
the aftermath of an attack that was probably undertaken by a “disgruntled
employee.” Well, we were lead to believe that it was a disgruntled
employee. But was it?
Here’s what happened:
At the time, the Mother Ship was content to allow the red headed step
child to run its own systems. As long as the paper got to where it
needed to be at the end of the month, each month, no worries, fuggetaboutit.
Someone compromised this operation at the root level, they understood
the timing and then they launched an attack that literally blew the
support columns out from underneath the entire thing THE DAY BEFORE THE
PAPER DUMP at the end of the month.
I got a call from one of the recruiters I was with on a Saturday. He
told me that this place wanted me to show up on Monday morning.
I asked, “For an interview?”
“No. For work. And they said to bring hip waders and a shovel.”
“Holy shit, what happened?”
“I don’t know but the people I’ve been talking to are panicking. They’re
at the office now (Saturday).” Not an exact quote, but something very
close to that.
Monday morning, bosses were still white faced and panicking. Many people
had been there over the weekend. The place reeked of greasy nerds who’d
been sweating out hundreds of gallons of cheap coffee.
The losses were in the tens of millions of dollars.
Now, here’s the interesting thing.
The firm didn’t call the cops. No state or federal law enforcement were
involved. There was no media coverage of the event at all. Not one story
anywhere. The firm handled the thing internally. They brought in “some
forensics people from New York” to find out who did it. If one of these
people wanted access to something, they didn’t even go to us, the IT
support and operations people. They called the CIO and that guy, always
drunk/hungover, moved like his life was on the line.
We never heard anything about how it wound up, what they found, or what
they did about it. The incident simply became known as, “That thing.”
The firm built a completely separate, parallel network infrastructure
along side the existing one. New cabling, even. New servers, new
routers, new client side systems. Everything new. Two factor
authentication, including hardware based crypto key generators. This
became known as the “clean” network, the Mother Ship’s network. The
existing network became known as the “dirty” side. Money was no object
in terms of this build out. [It is interesting to note that since I wrote this,
a few months ago, the entire operation has been rolled up, all employees fired
and offices vacated. It went down exactly the way I said it would in the
Wall Street Chop Shop piece.]
Anyway, I don’t want to know what “connected” actually means when it
comes to this firm. I can’t begin to imagine what that thing does, off
the books. That’s why I’m not posting this in public.
Obviously, anyone who bought that shit they were selling is going to be
pissed.
Disgruntled employee?
When I was a boy, we called an attack like that, “strategic information
warfare.” Maybe the attackers looked at the Mother Ship’s network and
found that it was too locked down. Someone or something tried to hurt
that firm bad and used the easiest vector to accomplish the most
financial damage. They also committed several federal crimes to do it.
Best,
Kevin
That was a taste of what happened when “very clever” wasn’t clever enough.
Via: GATA:
Lindsey’s charts went into the collateralized debt obligation problem, the asset-backed commercial paper, mortgage-backed securities .. the lot. He said that it will “force banks et al. to mark these products to market (over time) instead of their current practice of marking to model … or to myth.” He wasn’t the least bit worried about how the hedge funds would manage because, as he said, they were very good at looking after themselves.
He appeared delighted that Wall Street had been able to unload hundreds of billions of dollars’ worth of (now toxic) CDOs on the rest of the world, saying that “we Americans were very clever” in doing this.
Research Credit: She Knows Who
New York Attorney General Sues First American Corp. for Allegedly Colluding with Washington Mutual Inc. to Use a List of Preferred Appraisers to Inflate Mortgage Appraisals
November 2nd, 2007Note this passage from the story below:
Washington Mutual isn’t listed as a defendant. At the press conference, Cuomo said his office chose not to pursue Washington Mutual as a defendant because of jurisdictional issues since the company is a chartered federal financial institution.
Washington Mutual executives should expect a visit from the feds at any moment.
Via: CNN:
New York Attorney General Andrew Cuomo said Thursday that his office sued First American Corp. (FAF) and its eAppraiseIT unit for allegedly colluding with Washington Mutual Inc. (WM) to use a list of preferred appraisers to inflate mortgage appraisals.
At a press conference Thursday, Cuomo said First American allegedly caved in to pressure from Washington Mutual, eAppraiseIT’s largest client, to use a list of so-called “proven appraisers” who allegedly provided inflated appraisal values.
“This is a case we believe is symbolic of an industry-wide problem,” Cuomo said. “By the way, it’s been a long-time problem.”
Eric Corngold, a senior prosecutor in Cuomo’s office, said at the press conference that eAppraiseIT conducted more than a quarter of a million appraisals for Washington Mutual in the past 18 months and was paid $50 million for doing so.
The lawsuit, which was filed in New York State Supreme Court in Manhattan, is seeking to stop the practice and disgorgement of fees that First American and eAppraiseIT received for the allegedly inflated appraisals.
Washington Mutual isn’t listed as a defendant. At the press conference, Cuomo said his office chose not to pursue Washington Mutual as a defendant because of jurisdictional issues since the company is a chartered federal financial institution.
Representatives from First American and Washington Mutual didn’t immediately return phone calls seeking comment Thursday.
The lawsuit alleges eAppraiseIT improperly allowed Washington Mutual’s loan production staff to handpick “appraisers who would bring in appraisal values high enough to permit WaMu’s loans to close” and improperly permitted Washington Mutual to pressure eAppraiseIT appraisers to change appraisal values that were too low to permit loans to close.
“Instead of preserving its independence, which would have protected consumers and business customers alike, eAppraiseIT chose to protect only itself,” the lawsuit said. “And senior executives at First American, though warned by eAppraiseIT’s senior management of its compromised independence, nonetheless directed eAppraiseIT to continue its wrongful conduct.”
The conduct constitutes a deceptive, fraudulent and illegal business practice under New York state law, the lawsuit said.
Washington Mutual retained eAppraiseIT in spring 2006 after deciding to close its internal appraisal office and terminate its staff appraisers. eAppraiseIT hired about 50 former Washington Mutual employees as staff appraisers and appraisal business managers, the lawsuit said.
Under its agreement with eAppraiseIT, Washington Mutual can challenge an appraiser’s conclusions by requesting a “reconsideration of value,” the lawsuit said.
“Throughout the business relationship, WaMu has frequently ordered ROVs from eAppraiseIT,” the lawsuit said.
In early summer 2006, Washington Mutual’s loan production staff began complaining that the eAppraiseIT appraisal values were too low, the lawsuit said.
During this period, First American was seeking additional business from Washington Mutual, which was conditioned on the success of the eAppraiseIT deal, the complaint said.
The lawsuit said eAppraiseIT eventually capitulated to Washington Mutual’s demands in February 2007, with an eAppraiseIT executive allegedly telling senior management at First American in an email: “we have agreed to roll over and just do it.”
LARGEST FED INTERVENTION IN FINANCIAL SYSTEM SINCE 9/11 AFTERMATH
November 2nd, 2007Who needs trading curbs with the Plunge Protection Team on the job?
I wonder if They’re going to run out of zeros in the computers that “print” the “money”?
Via: AP:
The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, the largest cash infusion since September 2001, to help companies get through a credit crunch.
The action came one day after Fed Chairman Ben Bernanke and all but one of his central bank colleagues voted to slice a key interest rate. It was the second time in six weeks that policymakers acted to protect the economy from the effects of the housing downturn and credit troubles.
Wall Street took a nosedive with the Dow Jones industrials losing 362.14 points to close at 13,567.87.
The Fed on Wednesday ordered its key rate, called the federal funds rate, to be lowered by one-quarter of a percentage point to 4.5 percent. That followed up on a half-percentage point cut in September. Those two rate reductions might be sufficient to help the economy make its way safely through trouble spots, Fed policymakers indicated.
The funds rate affects many other interest rates charged to millions of individuals and businesses and is the Fed’s most potent tool for influencing economic activity.
The Federal Reserve Bank of New York, which carries out the central bank’s open market operations, moved Thursday to inject $41 billion in temporary reserves into the financial system.
A New York Fed spokesman said it was the largest single day of operations since $50.35 billion was pumped into the system on Sept. 19, 2001, following the terrorist attacks on New York and Washington. He declined further comment.
Fed policymakers at their meeting on Wednesday noted that the “strains from financial markets have eased somewhat on balance.” In the past week, many Fed officials have described the state of financial markets as fragile.
Bernanke and other Fed officials have said it will take time for the markets to fully recover from the credit crisis.
Since August, the Fed has been pumping cash into the financial system to help ease strains from the credit crunch. It also has cut its lending rate to banks — a third such cut came on Wednesday.
Loonie at All Time High vs. Dollar
November 1st, 2007Ay?
Via: Globe and Mail:
The seemingly unstoppable Canadian dollar surged to its highest level yet Wednesday, topping 106.17 cents (U.S.).
The record came just after 4 p.m., when official trading ended for the day. Officially, the dollar closed at 105.85 cents, up nearly a cent from Tuesday’s close, but trading continues virtually around the clock.
By cracking through 106 cents, the dollar topped what most observers believe to be the old record of 106.14 cents set on Aug. 20, 1957.
Technically, the dollar was worth as much as $2.78 in the late 1800s, but that’s largely because during Canada’s early history the value of the currency was either pegged to the price of gold or regulated by the government. It wasn’t until 1950 that the dollar began trading freely on global markets, according to the History of the Canadian Dollar, written by James Powell. The Bank of Canada recognizes the 1957 mark as the official record.
Gold Rises on Fed Rate Cut
November 1st, 2007Here’s my take on this from several days ago. If any of you were waiting to hedge with some put options at higher strikes… Here they are.
Thank you. I’ll be here all week. Tip your waitress.
To those of you who trade options on futures (not options on equities), which firms are good these days?
Via: AP:
Gold barreled above $800 an ounce Wednesday for the first time since 1980 as investors cheered the Federal Reserve’s decision to lower its benchmark interest rate by a quarter point.
The Fed dropped its federal funds rate to 4.50 percent, as the markets widely anticipated. Lower interest rates tend to undermine the dollar and raise the allure of precious metals as an investment alternative. The dollar stumbled to another low against the euro following the Fed’s decision on Wednesday, helping drive gold higher.
Although the regular trading sessions of most commodities markets were closed before the Fed released its decision, gold prices continued to climb in aftermarket trading. An ounce of gold gained $7.50 to settle at $795.30 an ounce on the New York Mercantile Exchange, then rose to a high of $800.80 ounce in later electronic activity.
Gold last topped $800 an ounce in 1980, when prices reached as high as $875 an ounce in January. Adjusted for inflation, an $800 ounce of gold in 1980 would be worth more than $2,000 today.
NYC’s ‘Realtor to the Stars’ Found Murdered
November 1st, 2007Fuggetaboutit.
Via: CBS News:
CBS 2 News has learned that Linda Stein, the former manager of the Ramones and “realtor to the stars,” was found dead, lying in a pool of blood in her multi-million-dollar Fifth Ave. apartment on Manhattans’ Upper East Side.
Police confirm she suffered blunt impact trauma to the head and neck.
EMS pronounced the 62-year-old former school teacher DOA when they arrived late Tuesday. The medical examiner ruled the death a homicide on Wednesday.
China: Birth Defects Soar Due to Pollution
November 1st, 2007These are just the numbers released by the diabolical Chinese regime. What are the real numbers!?
Via: Guardian / Reuters:
Birth defects in Chinese infants have soared nearly 40 percent since 2001, a government report said, and officials linked the rise to China’s worsening environmental degradation.
The rate of defects had risen from 104.9 per 10,000 births in 2001, to 145.5 in 2006, affecting nearly one in 10 families, China’s National Population and Family Planning Commission said in a report on its Web site (www.chinapop.gov.cn).
Infants with birth defects now accounted for “about 4 to 6 percent of total births every year”, the family planning agency said. Of these, 30 percent would die and 40 percent would be “disabled”.
The World Health Organisation estimates about 3 to 5 percent of children worldwide are born with birth defects.
Research Credit: Alison
AT&T Invents Programming Language for Mass Surveillance
October 31st, 2007Please indulge me by re-reading this extended passage from Synthetic Environments for Analysis and Simulation:
Remember Russell Tice, the NSA SIGINT officer who had knowledge of a special access NSA operation that was so disturbing that he tried to tell the U.S. Congress about it?
What was Tice talking about here:
Tice said his information is different from the Terrorist Surveillance Program that Bush acknowledged in December and from news accounts this week that the NSA has been secretly collecting phone call records of millions of Americans. “It’s an angle that you haven’t heard about yet,” he said.
An angle that we haven’t heard about. Since everyone and his dog knows about the mass surveillance, what could that angle be?
More recently, Tice said that the NSA intercepts of civilian traffic is “the tip of the iceberg” and says, again, that there is something else, something we still don’t know about. Here’s part of the interview between Tice and Reason:
REASON: What prompted you to step forward now?
Tice: Well, I’ve known this for a long time and I’ve kept my mouth shut…
REASON: You’re referring to what James Risen calls “The Program,” the NSA wiretaps that have been reported on?
Tice: No, I’m referring to what I need to tell Congress that no one knows yet, which is only tertiarily connected to what you know about now.
Ok, so the outrage that Tice was willing to ruin his life over is only “tertiarily connected” to the operation we already new about.
Tice continues:
In my case, there’s no way the programs I want to talk to Congress about should be public ever, unless maybe in 200 years they want to declassify them. You should never learn about it; no one at the Times should ever learn about these things.
The surveillance side of this is the chickenfeed. There’s something far more sinister than the simple surveillance… an angle we haven’t heard about yet.
Tice never did tell his story to Congress about this different aspect of the program.
Well, my guess is that it has something to do with providing surveillance data for this SEAS World Sim thing, and that individual Americans are being watched and potentially targeted with it. Tice’s background seems to involve a lot of traditional electronic warfare, radar and ELINT stuff. Maybe Tice’s deal involved the collection of the mobile phone GPS and/or triangulation data which would provide realtime spacial/geographic data to the SEAS system. In other words, SEAS sees you. They could bring up a map of a city and plot your path based on the information that your phone is exchanging with the mobile network.
— End Excerpt —
In summary, my thesis was that the NSA operation that Tice was involved with was related to tracking individual Americans, on the ground, in real time, using the mobile phone networks.
Ok, now, Wired’s Threat Level just published a story about Hancock, an AT&T programming language that was designed for parsing large blocks of data for surveillance purposes. Within the context of my theory above—about the operation Tice was involved with—look at this:
Programs written in Hancock work by analyzing data as it flows into a data warehouse. That differentiates the language from traditional data-mining applications which tend to look for patterns in static databases. A 2004 paper published in ACM Transactions on Programming Languages and Systems shows how Hancock code can sift calling card records, long distance calls, IP addresses and internet traffic dumps, and even track the physical movements of mobile phone customers as their signal moves from cell site to cell site.
All of these tidbits… It’s all the same operation. They have an unthinkable surveillance capability that includes all of your email, web, purchasing and telephone activity. And, if I’m right, they’re keeping track of where you are and where you’ve been. Oh yeah, wave at the birdy.
I know. It’s too incredible. Impossible, you might think.
What’s impossible is trying to grasp what the intelligence agencies did with $43.5 billion just in 2007. Yeah. Yeah. Incompetence. Inefficiency. Ripoffs. The usual $4000 toilet seat refrain. Fine. But if that’s your perspective, what’s your theory about the operation Tice was involved with?
They got something for the billions of dollars spent on this crap over the last several years and I’m pretty sure that it knows more about all of us than we can imagine.
There’s no way the programs I want to talk to Congress about should be public ever, unless maybe in 200 years they want to declassify them. You should never learn about it…
Via: Wired:
From the company that brought you the C programming language comes Hancock, a C variant developed by AT&T researchers to mine gigabytes of the company’s telephone and internet records for surveillance purposes.
An AT&T research paper published in 2001 and unearthed today by Andrew Appel at Freedom to Tinker shows how the phone company uses Hancock-coded software to crunch through tens of millions of long distance phone records a night to draw up what AT&T calls “communities of interest” — i.e., calling circles that show who is talking to whom.
The system was built in the late 1990s to develop marketing leads, and as a security tool to see if new customers called the same numbers as previously cut-off fraudsters — something the paper refers to as “guilt by association.”
But it’s of interest to THREAT LEVEL because of recent revelations that the FBI has been requesting “communities of interest” records from phone companies under the USA PATRIOT Act without a warrant. Where the bureau got the idea that phone companies collect such data has, until now, been a mystery.
According to a letter from Verizon to a congressional committee earlier this month, the FBI has been asking Verizon for “community of interest” records on some of its customers out to two generations — i.e., not just the people that communicated with an FBI target, but also those who talked to people who talked to an FBI target. Verizon, though, doesn’t create those records and couldn’t comply. Now it appears that AT&T invented the concept and the technology. It even owns a patent on some of its data mining methods, issued to two of Hancock’s creators in 2002.
Programs written in Hancock work by analyzing data as it flows into a data warehouse. That differentiates the language from traditional data-mining applications which tend to look for patterns in static databases. A 2004 paper published in ACM Transactions on Programming Languages and Systems shows how Hancock code can sift calling card records, long distance calls, IP addresses and internet traffic dumps, and even track the physical movements of mobile phone customers as their signal moves from cell site to cell site.
With Hancock, “analysts could store sufficiently precise information to enable new applications previously thought to be infeasible,” the program authors wrote.
