Mish's Global Economic Trend Analysis |
Posted: 07 Jan 2012 11:24 AM PST The always behind-the-curve Fed seeks to fine mortgage servicers for unsafe practices and robo-signing with an amount dependent on allegedly independent review by consultants. Federal Reserve Governor Sarah Bloom Raskin on Saturday said the Fed must impose monetary penalties on banks who entered into an April agreement with regulators over how to fix problems in their mortgage servicing businesses.Expect Trivial Penalties, Spread a Mile Wide Don't expect this announcement to amount to much of anything. Penalties, if any will be trivial and the fines are nearly guaranteed to not benefit those harmed in any substantial way. Instead, expect fines to be spread out to include those not harmed at all. Another Whitewashing Move by the SEC Similarly, don't expect much of anything from this feeble announcement: SEC to demand admission of wrongdoing in some cases Securities regulators will no longer let companies settle civil cases without admitting or denying the charges if they have already admitted wrongdoing in parallel criminal cases.This policy "non-change" borders on the absurd. The ruling only applies to only to instances where a defendant has already admitted to violating criminal laws. Notice that the ruling does not even apply to the Citigroup case in which a Judge Blasted the the SEC. "Doesn't the S.E.C. have an interest in what the truth is?" Judge Rakoff asked, in reference to the commission's longstanding practice of not forcing a defendant to admit any wrongdoing when settling a case.SEC Fine vs. Citigroup Gain Please consider SEC Tired of Fighting Big Banks-Calls Federal Judge Rakoff Refusal to Approve Citigroup Settlement-Shortsighted. Estimates are that Citigroup made a $3.8 billion profit from the bogus investment portfolio. The investors lost over $700 million. The $285 million offer to settle is a joke. The Judge made clear he would not allow corporations to continue to buy their way out of fraud from "a cost of doing business" fund. The Judge demands the truth to be revealed and the public protected.While essentially ignoring billions of dollars in repeated fraud allegations against Citigroup, the SEC brought full weight down on Martha Stewart over (drum roll please) ... $45,673. Martha Stewart went to prison and was fined $30,000. Since then, no one has gone to prison or even been criminally indicted in $trillions of dollars of fraud in the global financial crisis. And unless someone does admit criminal action, the SEC reserves the right to do more whitewashing without seeking admission of guilt. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
German Factory Orders Drop Most in Nearly 3 Years; Icing On the European Recession Cake Posted: 07 Jan 2012 12:31 AM PST It is amusing to see how other writers portray a story vs. what I would say about the same data. For example, Bloomberg columnist Rainer Buergin reports German Factory Orders Declined Most in Almost Three Years. Please consider Buergin's interpretation of the story vs. mine. Both follow. Bloomberg: German factory orders dropped the most in almost three years in November as the euro region economy edged toward a recession and global demand weakened. Mish: German factory orders dropped the most in almost three years in November as the European recession deepened. Bloomberg: Orders, adjusted for seasonal swings and inflation, slipped 4.8 percent from October, when they surged a revised 5 percent, the Economy Ministry in Berlin said in a statement today. That's the biggest drop since January 2009. Economists forecast a decline of 1.8 percent, according to the median of 25 estimates in a Bloomberg News survey. Comment: That paragraph is fine. Bloomberg: While the euro region's sovereign debt crisis has clouded the outlook and cooling global growth is hurting export orders, Europe's biggest economy may still avert a recession. Mish: The euro region's sovereign debt crisis, coupled with austerity measures and rising taxes in Greece, Spain, Italy, France has clarified the outlook, and it's not pretty. The European recession will be extremely harsh and Germany will not escape. Bloomberg: Unemployment at a two-decade low is helping to bolster consumer sentiment, service industries expanded in December and business confidence unexpectedly rose for a second month. Mish: German unemployment at a two-decade low has temporarily helped boost consumer sentiment. In addition, service industries expanded in December and business confidence unexpectedly rose for a second month. However, do not expect those conditions to last. Any notion that Germany will escape a brutal European recession is complete silliness. Indeed, Germany and the entire Eurozone is already in a recession. Conditions will worsen as tax hikes and austerity measures take an enormous toll. Fundamentally, hiking taxes in the midst of a recession is the worst possible thing to do, yet various officials, including Nicolas Sarkozy, the president of France are clamoring for still more tax hikes. Escalating trade wars between France and Spain are icing on the recession cake. For details please see ... "Social VAT" Trade Wars Heat Up Between Spain and France Brussels Recommends Sucking Spain Dry with Increased VAT; France to Raise Sales Tax to Protect Jobs; Is There Any Point or Reason for the Eurozone? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List |
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