Monday, May 4, 2009

You Still Can't Make This Stuff Up

Ever hear of the United States Energy Information Administration? Thought not. It was formed by Congress in 1977 to monitor energy information. It provides information to the CFTC so that the CFTC can monitor the markets in regulates. On April 9 the USEIA released a second interim report stating that, based on the information it has, it still cannot blame last year's oil price hike on specualtors. So what information does the USEIA have?

It only has the trades on the New York Mercantile Exchange. IT HAS NO INFORMATION ON THE OVER THE COUNTER UNREGULATED MARKETS SUCH AS ICE. So, all trades that use the Enron loophole, created by former Goldman man Mr. Gensler, escape scrutiny altogether. And now our president wants to put Mr. Gensler in charge of the CFTC. Like I said, you can't make this stuff up.

A Day Early

Guess I spoke a day too soon, since the Wall Street Journal this morning hammered former Goldman director Stephen Friedman, the former chairman of the New York Fed when
Goldman got $10 billion in TARP funds. Friedman had large Goldman stock holdings and was in violation of Fed rules, but of course the rules were waived so that he could keep his shares and still regulate....Goldman, among others.

Wonder why someone nationally cannot put all the outstanding issues on the same page, or at least the same article. Guess they all have to chase their own stories....

Sunday, May 3, 2009

Where is Congress?

Let's see, in the last 3 months we learned 1) Goldman may have caused the oil price spike last summer for its own gain; 2) Goldman has been accused of manipulating the stock of Bear Sterns and Lehman Brothers by spreading negative rumors; 3) Goldman recieves $12.9 billion in Tarp funds from the AIG bailout while admitting to hedging against AIG; 4) Goldman has been accused of advising the feds to let Lehman go, while saving AIG, hell, I could go on ad nauseum.

Yet only Maxine in Congress seems to care. The national press sure as hell doesn't. Guess when you have your people placed all over the Fed annd Treasury Department, you feel a little insulated. Maybe its just the money Goldman spends lobbying our elected officials. Maybe we just have not yelled loud enough. I have to say that Goldman sure has been quiet since it got a little negative press last month and Mr. Blankfien went on the offense and promised to look at the bonuses. Waiting for the thunderstorm to pass through I guess.

Tuesday, April 28, 2009

Meanwhile, back to SemGroup

SemGroup's former CEO, Tom Kivisto, through his counsel, has come out swinging at the report of former FBI Director Louis Freeh, who was appointed examiner in the SemGroup bankruptcy. Counsel correctly notes that the voluminous report fails to identify a single person from Goldman or Bank of America who was supposedly interviewed. Nor does the report refernce a single document from Goldman other than the GS TRUE platform offering prepared for SemGroup by Goldman (wherein Goldman obtained Sem's trading book). In fact, Bank of America, as administrative agent of SemGroup's bank group (which includes Goldman) was given the opportunity to scrub the report in advance.

This all begs the question of why the examiner totally ignored the already broken story of the possible manipulation of oil prices by Goldman when issuing his report. Kinda like the way it has been ignored by the national media. Maybe when you have so many of your people in the government you don't have to worry about such things. You bet both sides of the deal, and take your government money. Maybe you then spread that money around. Hell, I don't know.

Freeh has now hit back, claiming Kivisto should have allowed himself to be sworn under oath as a part of the investigation. You would think the former FBI Director would know about the 5th Amendment. Nah, maybe he just wanted to put Kivisto in a star chamber with no preparation. Anyway, I am damn sure Kivisto's counsel kept Freeh informed, just like Forbes did. The facts they provided just did not apply to the foregone conclusion.

Monday, April 20, 2009

A little like AIG.....

Goldman has been accused by various reputable publications of profiting twice from the AIG bailout, by hedging against AIG on one side, and getting paid $12.9 billion on counterparty obligations of AIG by our government on the other side. Maybe they learned the trick in SemGroup

You see, they hedged against SemGroup. At the same time, J. Aron bought oil from Semgroup. The day before the bankruptcy, J. Aron terminated the trading agreements (see below) and netted out $350 million owed to SemGroup. Now who got hurt? The producers who sold the oil to SemGroup in June and July did not get paid because SemGroup did not get paid. So the people who worked and sweated their butts off to get the oil out of the ground have recieved no payment for the highest price oil in history. But J. Aron did. And the public got to pay $3.50 a gallon.

Thursday, April 16, 2009

And The Winner Is...

The Louis Freeh report is now"out" at least to the public in the SemGroup bankruptcy. Of course Goldman and the banks got to scrub it prepublication for "privilege". At first blush Freeh appears to blame SemGroup bosses, Kivisto, Wallace, and others. A closer inspection reveals that SemGroup traders believed they had a trading strategy that worked so long as oil stayed within its historical range (can you say supply and demand) The problems arose in may and June 2008 when"incredible volitility and one way movement of oil market overwhelmed the investment strategy" (can you say speculation)

More importantly, the Report confirms that Forbes was right. Buried right in the middle, at page 131, it states that "Stallings confirmed that Goldman made more data requests to SemGroup during its due diligence inquiry regarding the types of trades that SemGroup had entered into, including a breakdown by commodity type and types of positions". While the report cites various Goldman and J. Aron sources, the sources are not named. Amazingly, the report accepts Goldman's version that it terminated SemGroups' private GT True offering in eraly July by phone call only.

Enough has been provided between the lines for the SemGroup unsecured creditor's committee to demand its own investigation of Goldman's role in this fiasco. Go for it guys!

Monday, April 13, 2009

They Cared For A Day

June 2, 2008, at a senate hearing on oil specualtion, Michael Greenberger testified how investment banks, including Goldman Sachs, were "continuing and repeating the 'subprime' crash of the securities markets, and all their derivatives, on the commodities markets" He went on to note "I find it highly ironic that when you control the price of oil, you can 'predict' when it will go from $130 to $200 a barrel". At a prior hearing on May 20, senators grilled the CFTC for allowing much of the speculative trading and urged it to "muscle up". In fact, much of the speculative oil trading is done through the Intercontinental Commodity Exchange (ICE), headquartered in Atlanta, and under the jurisdiction of the British Financial Services Authority (This is no joke)

10 months later, the price of oil is a third of what is was last summer, Senator Stevens has been indicted, convicted and released, and we have a new president who wants to put the guy who helped invent these loopholes in charge of the CTFC. Well hell, the price of oil is down now, no one cares, we can get away with it. Thank God for Senator Bernie Sanders, the Vermont independent, who has put a hold on the nomination on these very grounds. Someone is still awake.