British Brokerage Firm PVM Admits Speculator Caused Spike In World Oil Prices

Oil brokerage PVM names rogue trader behind oil spike

Reuters

By David Sheppard David Sheppard Fri Jul 3, 8:40 am ET

LONDON (Reuters) – PVM Oil Futures Limited said on Friday Steve Perkins, a senior broker based at the firm’s London office, was responsible for unauthorized trades earlier this week which landed the firm with a loss of nearly $10 million.

The London-based brokerage said Perkins had taken the positions in Brent crude futures early on Tuesday.

The heavy buying during the Asian trading day when volumes tend to be lower caused global crude prices to spike to their highest level this year. Traders and analysts initially struggled to explain the price move.

Brent was trading at about $66 a barrel on Friday, down from the high of $73.50 struck on Tuesday.

After discovering the trades, PVM said in a statement on Thursday it had closed them out “in an orderly fashion,” resulting in losses approaching $10 million.

It said its brokers were not authorized to take positions in the crude oil markets. Oil brokers generally help to match up trading counter-parties such as banks and hedge funds rather than dealing themselves.

PVM confirmed Perkins was a Brent crude futures broker, but declined to discuss his possible motivation for the unauthorized trades. (political or financial or both)

The brokerage said on Thursday PVM was conducting a full investigation and it had informed the Financial Services Authority (FSA), Britain’s regulatory body, as well as the InterContinental Exchange (ICE) (ICE.N), where the majority of Brent futures trade takes place.

PVM is the world’s largest independent broker, trading more than 100 million barrels of over-the-counter and oil futures a day on average. The company said it had met all margin calls caused by the unauthorized trades and was conducting business as usual.

In May, the FSA banned a former Morgan Stanley (MS.N) trader who built up a hefty unauthorized oil futures position following a long liquid lunch, before hiding the deals overnight.

REGULATION

Excessive speculation in oil and commodities markets has been high on the regulatory agenda since crude prices soared to a record of nearly $150 a barrel last July.

PVM head David Hufton has been an outspoken critic of oil market speculation, describing some exchanges as “electronic oil casinos” that boost the price of oil.

Oil analysts said this week’s events could add further ammunition to those already pushing for tighter regulation on futures exchanges and over-the-counter markets following last year’s price surge and the global financial crisis.

The U.S. government wants to boost oversight of commodity markets and expand the power of the Commodities Futures Trading Commission (CFTC), including looking at tightenening the number of speculative positions any one firm or trader can hold.

Analysts said the FSA was expected to follow any moves to reduce position limits taken by its U.S. counterpart in commodity markets.

(Reporting by David Sheppard; additional reporting by Alex Lawler in London and Yaw Yan Chong in Singapore; editing by William Hardy)

http://news.yahoo.com/s/nm/20090703/bs_nm/us_pvm_trade_4   http://www.reuters.com/article/governmentFilingsNews/idUSL336867120090703   http://business.timesonline.co.uk/tol/business/industry_sectors/natural_resources/article6628545.ece  

So much for all the talk about how increasing oil prices are an indication of the recovering U.S. economy. The price increases have nothing to do with supply and demand. Specualtors, both financial and political are manipulating the price of oil and gasoline. Additional regulation is fine but the real answer lays in “Drill Baby Drill”, develop all of America’s Oil, Gas and Nuclear potential. What happened to last year’s election time “pledge”, when even the Democrats promised to “Drill Baby Drill”. Can’t believe a damn thing they say can we …..  isn’t it ironic that today marks the 1 year anniversary of $145 a barrel crude – http://money.cnn.com/2009/07/02/markets/year_oil/index.htm

In Decemebr 2008 the price of crude dipped to $33.87 a barrell. http://money.cnn.com/2009/07/02/markets/year_oil/index.htm

Unemployment Expected to hit 11% in 2010. Just How Bad Was Unemployment Under President Bush?

Fed mulls tweaks to economic revival programs

WASHINGTON – With signs the economy is improving but still fragile, Federal Reserve policymakers are considering whether some programs intended to drive down rates on mortgages and other consumer debt should be slowed down. (Is the Administration  reversing course here or are they just running out of money …)

The nation’s unemployment rate — now at 9.4 percent — is expected to keep climbing into 2010. Acknowledging that the jobless rate is going to climb over 10 percent, President Barack Obama said Tuesday he’s not satisfied with the progress his administration has made on the economy.

Some analysts say the rate could rise as high as 11 percent by the next summer (2010) before it starts to decline. The highest rate since World War II was 10.8 percent at the end of 1982.

An index measuring chief executives‘ business expectations showed an improved outlook from last quarter’s record low, but many still expect declines in sales, jobs and capital spending.

“We don’t see continued free fall,” Ivan G. Seidenberg, chairman of the Business Roundtable and CEO of Verizon Communications, said Tuesday. “But nobody’s ready to suggest they’re going to begin hiring.”

http://news.yahoo.com/s/ap/20090624/ap_on_bi_ge/us_fed_interest_rates

The following is not intended to be a defense of President George W. Bush’s economic policies – it is not. President George W. Bush’s failure to keep the Democratic Congress’s spending in check and his inability to get that Congress to curb their reckless mortgage programs between 2006 and 2008, led to our current economic woes. That said, the following are facts:

During the 8 years of the George W. Bush Presidency the lowest annual unemployment rate was 4.61% in 2007, the highest annual unemployment rate was 5.76% in 2008. During Bush’s 8 years as President the average unemployment rate  was 5.27%, roughly 1/2 half of what the unemployment rate is today.

Before you post an unsubtantiated response, I invite you to check the math for yourself.   http://www.miseryindex.us/urbyyear.asp 

During the George W. Bush presidency the average number of people “unemployed” at any time was 8.25 million. At the end of May 2009, a total of 14.9 million people were unemployed (9.4% unemployment rate). http://www.bls.gov/news.release/empsit.nr0.htm 

When unemployment hits 11% in 2010, over 17 Million will be unemployed, well over twice the average number of unemployed during the George W. Bush Presidency.     

It is unfortunate that the “experts” now predict that the  unemployment rate will not drop below 6% before 2016, at the earliest.

Who would have thought that after 6 months of Obama we’d be referring to the “good old Bush days”?

Countrywide Bank CEO Charged With Fraud – Mazilo’s Emails Reveal Complete Understanding Of Pending Mortgage Crisis & Its Causes

The following emails from Countrywide Bank CEO Angelo Mazilo, released as part of a report concerning the charges brought by the SEC against Mazilo, clearly show that Mazilo understood the causes of the current mortgage crisis before it occurred ……

Excerpts of E-Mails From Angelo Mozilo

Sept. 26, 2006 – following up a meeting with Sambol the previous day about the Pay-Option ARM loan portfolio:

We have no way, with any reasonable certainty, to assess the real risk of holding these loans on our balance sheet. The only history we can look to is that of World Savings however their portfolio was fundamentally different than ours in that their focus was equity and our focus is FICO (Credit Score). In my judgement [sic], as a long time lender, I would always trade off FICO for equity. The bottom line is that we are flying blind on how these loans will perform in a stressed environment of higher unemployment, reduced values and slowing home sales.

… pay options are currently mispriced in the secondary market, and that spread could disappear quickly if there is an foreseen [sic] headline event such as another lender getting into deep trouble with this product or
because of negative investor occurance [sic].

“timing is right” … to … “sell all newly originated pay options and beginrolling off the bank balance sheet, in an orderly manner, pay optionscurrently in their port[folio].”

April 17, 2006 – to Sambol concerning Countrywide’s subprime 80/20 loans:

In all my years in the business I have never seen a more toxic prduct [sic].

It’s not only subordinated to the first, but the first is subprime. Inaddition, the FICOs are below 600, below 500 and some below 400[.]

With real estate values coming down…the product will become increasingly worse. There has [sic] to be major changes in this program,including substantial increases in the minimum FICO. … Whether you consider the business milk or not, I am prepared to go without milk irrespective of the consequences to our production.

 

April 13, 2006 to Sambol, Sieracki, and others to address issues relating to the 100 percent subprime second business in light of the losses associated with the HSBC buyback:

Loans had been originated … “through our channels with disregard for process[and] compliance with guidelines.”

He “personally observed a serious lack of compliance within our origination system as it relates to documentation and generally a deterioration in the quality of loans originated versus the pricing of those loan [sic].”

“[i]n my conversations with Sambol he calls the 100% sub prime seconds as the ‘milk’ of the business. Frankly, I consider that product line to be the poison of ours.”

On March 28, 2006 – to Sambol and others:

Directed them to implement a series of corrective measures to “avoid the errors of both judgment and protocol that have led to the issues that we face today caused by the buybacks mandated by HSBC.” …

… The 100% loan-to-value subprime product is “the most dangerous product in existence and there can be nothing more toxic and therefore requires that no deviation from guidelines be permitted irrespective of the
circumstances.”

McAuleys World: At the insistence of Fannie Mae and The Federal Reserve these “toxic loans” continued for another 2 years after these emails, right up until the collapse of the financial system last fall. These very same loan products have been repackaged, renamed and continue to be marketed today.

You might note that at the same point in time that Mazilo prepared this email, Senator Chris Dodd was “accepting” “special treatment” in his loan processing with Countrywide Bank. Senator Dodd was one of a select few to belong to a group called the “FOAs” or “Friends Of Angelo”, referring, of course, to Angelo Mazilo.   

http://www.foxbusiness.com/story/markets/countrywide-ceo-mozilo-charged-fraud/    

For more info on the “Friends of Angelo” watch this NBC report:

 If you want to understand the history of how the Federal Government “mandated” the creation of the “toxic mortgage products” discussed in Mazilo’s emails read these articles:

1) From The Boston Globe: http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

2). Article by John Lott, Senior Research Scientist at the University of Maryland. http://johnrlott.tripod.com/op-eds/FoxNewsMortgagesReg091808.html

Obama puts critics of financial overhaul on notice! Just more of the same old ****. Video of “Regulators reporting to Congress”

Have you read this …….

WASHINGTON – President Barack Obama said Saturday that current financial rules exploit consumers and he put critics of his proposed overhaul on notice: “While I’m not spoiling for a fight, I’m ready for one.”

Obama used his weekly radio and Internet address to defend his recent proposal, which is intended to prevent a repeat of the breakdown that has sent the U.S. economy reeling. But such major changes face a fight in Congress and opposition from some leaders in the banking and insurance industries.

In the address, Obama focused on a consumer watchdog office that he wants to set up.

“This is essential,” Obama said. “For this crisis may have started on Wall Street. But its impacts have been felt by ordinary Americans who rely on credit cards, home loans and other financial instruments. http://news.yahoo.com/s/ap/20090620/ap_on_go_pr_wh/us_obama_consumers

It is generally agreed that the current financial crisis started in the mortgage industry and the primary entities responsible for the collapse were Fannie Mae and the Federal Reserve. Yes, the same Federal Reserve Obama wants to give more power too.

Do you know how many “Federal Regualtors” were employed to “over see” Fannie Mae in the last deacade?  Two hundred, full time regulators. Were they asleep at the wheel?  Heck No! They did their jobs and then were ignored by Congress when they reported the misdeeds they uncovered.

The video below is a sample of one group of regulators reporting to Congress on this very issue ……

Franklyn Raines – CEO of Fannie Mae, later entered into a plea deal on charges of cooking the book …..

Note that a question was asked in the video, “why should Congress trust OFEO?” (the Regulatory Agency) who both discovered and alerted Congress to the misdeeds  – The real question is can the people trust “politically motivated” Polticians who ignore the Regualtors who are already in place.  

What did the Congress suggest – changes in Fannie Mae?  Heck No. Listen to Congresswoman Maxine Waters – the Regulators were “to blame” for trying to stop Fannie Mae – yep tose are Rep. Waters word the Regulators were to balme for trying to Fannie from starting this crisis. Presented with evidence of the problem Barney Frank denies a problem existed – listen to his words above and listen to him later try to deny these very same words below …

Take this article, from the Boston Globe, as a uniquely honest example of reporting on the topic ….

 The Boston Globe

Frank’s fingerprints are all over the financial fiasco

 

‘THE PRIVATE SECTOR got us into this mess. The government has to get us out of it.”

That’s Barney Frank’s story, and he’s sticking to it. As the Massachusetts Democrat has explained it in recent days, the current financial crisis is the spawn of the free market run amok, with the political class guilty only of failing to rein the capitalists in. The Wall Street meltdown was caused by “bad decisions that were made by people in the private sector,” Frank said; the country is in dire straits today “thanks to a conservative philosophy that says the market knows best.” And that philosophy goes “back to Ronald Reagan, when at his inauguration he said, ‘Government is not the answer to our problems; government is the problem.’ “

In fact, that isn’t what Reagan said. His actual words were: “In this present crisis, government is not the solution to our problem; government is the problem.” Were he president today, he would be saying much the same thing.

Because while the mortgage crisis convulsing Wall Street has its share of private-sector culprits — many of whom have been learning lately just how pitiless the private sector’s discipline can be — they weren’t the ones who “got us into this mess.” Barney Frank’s talking points notwithstanding, mortgage lenders didn’t wake up one fine day deciding to junk long-held standards of creditworthiness in order to make ill-advised loans to unqualified borrowers. It would be closer to the truth to say they woke up to find the government twisting their arms and demanding that they do so – or else.

http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2008/09/28/franks_fingerprints_are_all_over_the_financial_fiasco/

For a history of the Federal Reserves’ active participation and the Feds “active regulatory activity” that started this mess see this article: http://johnrlott.tripod.com/op-eds/FoxNewsMortgagesReg091808.html

The last thing America needs is more regulation from the same people who “regulated” the colapse into being in the first place. Amercia needs to get the Politican out of our wallets and 401ks and let America get back to work. Higher taxes and additional, corrupt regulation, won’t create more jobs. It will mean a weaker economy.

Additional Regulation won’t work if Congress can ignore the Regulators who are already in place …… while they take cash from the regulated ……..

and using their offices to work sweetheart deals (Senator Chris Dodd and Countrywide Bank) with those being regulated ….

Before you respond that Fox News is biased – check out this report from NBC …

Angello Mazillo, CEO of Countrywide has been charged with fraud and insider trading …..

http://money.aol.com/article/sec-charging-ex-countrywide-ceo-mozilo/481893?bId=MoneyBoard&tId=mfida481893&bpId=%2F&sort=3&pg=4

We don’t need more regulations that the crooked Politicians refuse to enforce …. We need fewer crooked Politicians.

Government Update: 1 Out Of 8 Mortgage Holders Are Now Delinquent Or Are In Foreclosure

12 percent are behind on mortgage or in foreclosure

AP

NEW YORK – A record 12 percent of homeowners with a mortgage are behind on their payments or in foreclosure as the housing crisis spreads to borrowers with good credit. And the wave of foreclosures isn’t expected to crest until the end of next year, the Mortgage Bankers Association said Thursday.

The foreclosure rate on prime fixed-rate loans doubled in the last year, and now represents the largest share of new foreclosures. Nearly 6 percent of fixed-rate mortgages to borrowers with good credit were in the foreclosure process.

At the same time, almost half of all adjustable-rate loans made to borrowers with shaky credit were past due or in foreclosure. There were no signs of improvement.

The pain, however, is spreading throughout the country as job losses take their toll. The number of newly laid off people requesting jobless benefits fell last week, the government said Thursday, but the number of people receiving unemployment benefits was the highest on record. These borrowers are harder for lenders to help with loan modifications.

http://news.yahoo.com/s/ap/20090528/ap_on_bi_ge/us_foreclosures

Government Corrects Unemployment Numbers – 17 Straight Weeks With Over 625,000 New Claims. Continuing Unemployment Claims Set All Time Record

As unemployment benefit extensions begin to expire in the 1st week of June 2009, millions of unemployed Americans will start falling through the cracks this next month. Will the Government claim a “drop” in the unemployment numbers just because the workers have exhausted their benefits?

WASHINGTON (AP) — The tally of newly laid-off people requesting jobless benefits fell last week, the government said Thursday, a sign that companies are cutting fewer workers.

But the number of people continuing to receive unemployment benefits rose to 6.78 million — the largest total on records dating back to 1967 and the 17th straight record week. The figures for continuing claims lag behind initial claims by one week.

The Labor Department said the number of initial claims for unemployment insurance dropped to a seasonally adjusted 623,000, from a revised figure of 636,000 in the previous week. It was below analysts’ estimates of 635,000. THE GOVERNMENT HAD ORIGINALLY REPORTED THAT 570,000 NEW JOBLESS CLAIMS HAD BEEN FILED LAST WEEK – CLEARLY AN INTENTIONAL UNDERREPORTING IN ATTEMPT TO “SPIN” THE REALITY OF THE CONTINUING RECESSION AND JOB LOSSES IN THE US ECONOMY. 

Auto-related layoffs elevated the jobless claims numbers in recent weeks, but a Labor Department analyst said no states said their claims figures were affected by job cuts in that sector last week. THE CURRENT NUMBERS DO NOT REFLECT THE ANTICIPATED AUTO RELATED JOB LOSSES EXEPCTED IN THE NEXT 60 DAYS.

The four-week average of initial jobless claims, which smooths out fluctuations, dropped slightly to 626,750. That figure is about 30,000 below the peak for the recession reached in early April. The real question to be asked, “Will these numbers be revised again, upward and above the “peak” monthly job loss number of 656,750 just 2 months ago?  Has there really been any improvement, or just political spin on the real numbers? The fact is this, people are not returning to work, new intial jobless claims remain above 625,000 per week. 

Do you remember Candidate Obama telling us last year that we were experiecing “the worst economy in the history of the world!  “Still, new claims (2009) remain far above levels in a healthier economy. Weekly initial claims were 378,000 a year ago.” During the first 3 months of 2008, a total of 240,000 jobless claims were filed, compare that with the 1,900,000 filed during the 1st 3 months of 2009. During the 1st 6 months of 2008, the US economy was adding jobs not losing them!                                  http://econoindicators.com/2008/04/adp-employment-report-april-2008/

And the relentless rise in continuing claims for jobless benefit means the unemployment rate, which reached 8.9 percent in April, will rise in May, economists said. Many economists expect the rate to approach 10 percent by the end of this year. THE UNEMPLOYMENT RATE THIS TIME LAST YEAR? The National Unemployment rate for April 2008 was 5.0%. Year to year, the unemployment is almost twice as high as a year ago. (An increase from 5% to 9%).                                                                   http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=latest_numbers&series_id=LNS14000000  

Even if layoffs are slowing, jobs remain scarce. A net total of more than 5.7 million jobs have been lost since the recession — the longest since World War II.

http://finance.yahoo.com/news/Initial-jobless-claims-drop-apf-15368339.html

 

Housing Recovery? April foreclosures rise 32 percent!

MIAMI – The number of U.S. households faced with losing their homes to foreclosure jumped 32 percent in April compared with the same month last year, with Nevada, Florida and California showing the highest rates, according to data released Wednesday.

More than 342,000 households received at least one foreclosure-related notice in April, RealtyTrac Inc. said. That means one in every 374 U.S. housing units received a foreclosure filing last month, the highest monthly rate since the Irvine, Calif.-based foreclosure listing firm began its report in January 2005.

April was the second straight month with more than 300,000 households receiving a foreclosure filing, as the number of borrowers with mortgage troubles failed to abate.

The April number, however, was less than one percent above that posted in March, when more than 340,000 properties were affected. The March data was up 17 percent from February and 46 percent from a year earlier.

“We’ve never seen two consecutive months like this,” said Rick Sharga, RealtyTrac’s senior vice president for marketing. “It’s the volume that’s surprising.”

While total foreclosure activity was up, the number of repossessions by banks was down on a monthly and annual basis to their lowest level since March of last year, RealtyTrac said.

But that’s far from positive news. Because much of the foreclosure activity in April was in the default and auction stages — the first parts of the foreclosure process — it’s likely that repossessions will increase in coming months, RealtyTrac said.

About 63,900 homes were repossessed in April, down 11 percent from about 71,700 in March, RealtyTrac said. But the mortgage industry has resumed cracking down on delinquent borrowers after foreclosures were temporarily halted by mortgage finance companies Fannie Mae and Freddie Mac, together with many other lenders.

“All of these loans are now being processed pretty rapidly by the servers,” Sharga said.

http://news.yahoo.com/s/ap/20090513/ap_on_bi_ge/us_foreclosure_rates

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