Gold Daily Chart

A fairly brutal correction from an overbought condition.

Ben relieved the downward pressure today when he dispelled the myth that the US will be raising interest rates any time soon.

What seems a little funny is that so many are commenting on the US economy and markets as though this has been an ordinary cyclical recession and it is done.

We think this is something obviously a little more 'consequential' given the years of reckless excess and malinvestment that have led up to where we are today.

The crisis is not over, not by a long shot. What we have seen so far is prelude.

US Dollar Very Long Term Chart

Three Reasons Why Ben Bernanke Should Not Be Confirmed as Fed Reserve Chairman

Chris Whalen does his usual good job of cutting through the fog of crisis to get to the bottom line of how Ben, Larry and Timmy have failed to discharge their responsibilities adequately.

This does not speak to motives for their failure. Are they merely the pampered products of the government and educational sectors, inadequately prepared for high positions, untempered by the push and pull of private industry and the commercial world? What some might call the new useful idiots of state corporatism?

Is the Obama Administration the product of the Clinton wing of the Democratic party and the Chicago political machine, or just the Children's Crusade, a reform movement movie staffed by the casting agency of Spineless and Clueless?

Political corruption has been in vogue for the past twenty years or so in the US. As others have suggested, this is just a further example of the regulatory capture that ensnares the administrators and thinkers of big government, education and media with promises of grants, lobbying donations, and fat consulting positions to reward their cooperation with the corporate elite.

Whatever the cause, it is quite obvious to anyone who is looking at the big picture, the system as a whole, that prolonging the status quo is no sustainable solution, and is just painting a thin coat of whitewash over pervasive rot.

The banks must be restrained, and the financial system reformed, and balance restored to the economy, before there can be any sustainable recovery.

Institutional Risk Analytics
Three Strikes on Ben Bernanke: AIG, Goldman Sachs & BAC/TARP
7 December 2009

To us, the confirmation hearings last week before the Senate Banking Committee only reaffirm in our minds that Benjamin Shalom Bernanke does not deserve a second term as Chairman of the Board of Governors of the Federal Reserve System. Including our comments on Bank of America (BAC) featured by Alan Abelson this week in Barron's, we have three reasons for this view:

First is the law. The bailout of American International Group (AIG) was clearly a violation of the Federal Reserve Act, both in terms of the "loans" made to the insolvent insurer and the hideous process whereby the loans were approved, after the fact, by Chairman Bernanke and the Fed Board. The loans were not adequately collateralized. This is publicly evidenced by the fact that the Fed of New York (FRBNY) exchanged debt claims on AIG itself for equity stakes in two insolvent insurance underwriting units. What more need be said?...

The second strike against Chairman Bernanke is leadership. In an exchange with SBC Chairman Christopher Dodd (D-CT), Bernanke said that he could not force the counterparties of AIG to take a haircuts on their CDS positions because he had "no leverage." Again, this goes back to the issue of why the loan to AIG was made at all.

Having made the first error,Bernanke and other Fed officials seek to use it as justification for further acts of idiocy. Chairman Dodd look incredulous and replied "you are the Chairman of the Federal Reserve," to which Bernanke replied that he did not want to abuse his "supervisory powers." Dodd replied "apparently not" in seeming disgust....

The third reason that the Senate should vote no on Chairman Bernanke's second four-year term as Fed Chairman is independence. While Bernanke publicly frets about the Fed losing its political independence as a result of greater congressional scrutiny of its operations, the central bank shows no independence or ability to supervise the largest banks for which it has legal responsibility. And Chairman Bernanke has the unmitigated gall to ask the Congress to increase the Fed's supervisory responsibilities....

No, It Is Not Entirely Different This Time - But It is More Insidious

There are some differences and they are significant.

The US is not on a gold standard, so the devaluation of the dollar does not have to occur in a stepwise function with an official restatement of value. This time the Fed can simply monetize debt and provide more dollars as it wills. That is fiat.

The US is not a net exporter to the world, as it was then. This is why Smoot-Hawley was harmful to the US recovery. The major nations of the world, such as Germany, Italy, and Japan, became engaged in their own domestic industrial recovery including rearmament. Today the US is the consumer for the world's exporting nations. And it also owns the reserve currency.

The New Deal was a bottom up Jobs Program. The Deal this time is a new version of trickle down. The second wave down in the Great Depression caught many of the professionals who had made millions shorting the initial market declines, or at least survived the Great Crash by selling early. The next wave down in the current credit collapse is going to boil the middle class, a few degrees at a time.



Geither: None Would Have Survived - Rolfe Winkler

US Dollar (DX) Daily Chart

The dollar rallied today on slightly higher interest rates, and hopes that the Fed will be able to raise short term rates more quickly than expected next year. The August Fed Funds futures ticked up a bit, raising the probability to 40% of a raise in the second half of 2010.

It is going to be interesting to see how Ben achieves this change in policy beyond the jawboning. Raising the interest paid on Excess Reserves is one way to do it, without actually draining funds directly from the real economy.

There is sort of a cocky smugness at the Fed that they believe they have inflation all figured out, given the Volcker experience. Just keep raising rates until you break it, and run a bluff on expectations as you go. We'll see how easy it is when the time comes.



As for the dollar, this appears to be a technical reversal of the low end of the downtrending channel, at least for now. Bucky has its work cut out for it. Without structural reform, the economy cannot build a recovery on low paying temporary jobs.

Timmy and Obama were on the airwaves today, touting programs to create jobs for next year. This will take money, and a resolve in the Congress that we do not yet see. Programs must be accompanied by reforms, or this is just The Credit Bubble, Part Trois.

Net Asset Values of Certain Precious Metal Funds and ETFs

Gold and Silver took some pretty stiff corrections as the jobs data provided a very temporary rally in stocks, but higher rates to the bonds, and with that some strength to the US dollar.

So far all this is well within our expectations. We bought back some of the trading positions which we sold on 2 December around 1225 when gold hit 1166 today, but will wait now to see if this support holds.

Later: Fresh update on the chart. Very quick move down to support levels. I will consider adding to the small position we bought back if gold can hit the 50 percent retracement level around 1150 on the daily.

Last: It did hit 1150 and I did execute some buys. The mining positions are hedged with SDS and TWM, but the bullion is a straight up buy.

November Non-Farm Payroll Report - It's Alive!

It's Alive! Well, Ben at least made the frog jump in response to repeated jolts of the dollar electric.

As you may have already heard, the US Non-Farm Payrolls Report for November came in better than expected with a loss of only 11,000 jobs, as compared to expectations of a loss of 111,000. And on cue, right after the Jobs Summit. The One is in Pennsylvania today claiming Economic Mission Accomplished. Now that's entertainment!

The economy has responded to Ben's monetary lightning. It has moved after an expansion of the monetary base that has not been seen since the early stage Great Depression, and a dollar devaluation which is still working its way through the system.

More importantly this sets the trend that the government wishes to sustain. Remember, we are not adding jobs, and especially permanent jobs that pay a solid living wage; we are losing jobs less quickly, and adding back marginal and temporary jobs for manufacturing jobs that continue to bleed out.

But for now that is enough for the markets it appears.



Most importantly it creates a definite bottom in the long term jobs trend.



The imaginary jobs report, aka the BLS Birth Death Model, is ticking along as a 'plug' in the numbers without a corresponding reaction to the underlying economy. The number did have an inordinate impact this month of November because of the slight seasonal adjustment. As you know the Birth Death model is added to the raw number prior to seasonality.



This chart makes the trends clear, but also shows the convergence between the raw and adjusted numbers in November. This is divergence is going to become a yawning gap as the BLS adjusts for seasonal hiring. There is a lot of temporary hiring for the holiday season in the US, and these jobs are eliminated in January. So the BLS adjusts the raw number significantly higher.



The improvement in the unemployment rate was largely due to people dropping off the radar of the government as their benefits run out. You can see this if you look at their estimate of the population of available workers. The number is shrinking, and the people drop into the 'discouraged' category.

This is revealed by what is called the "Labor Participation Rate." It dropped in November from 65.1% to 65%. Less people are working against a more stable measure of the population, civilian workers over the age of 16 that have not disappeared, at least as far as the government is concerned.



The question now is sustainability. The Fed and Treasury have jolted the corpse of the US economy back into a semblance of life. But can it sustain itself without a continuing printing of money to the point of hyperinflation?

Watch the median wage, and the actual spending numbers. This will tell us if the monster has a pulse of its own, and can be taken off the Fed's lightning. And if it is, what is it most likely to do once it gains momentum?

Deflation is rather unlikely unless there is an exogenous shock or a major policy error of tightening rates too quickly, almost deliberately. As this would be economic suicide we assume Ben will not jump off the ledge.

We also assume this will help Ben's nomination for a second term. And will make it highly difficult for Obama to wring another stimulus out of the Congress.

But, has the Bernanke Fed discovered the means to permanent prosperity for all? Is it enough to print money and through it from helicopters, if even to only a select few corporations? What are the unintended consequences yet to emerge?

The stage is being set for stagflation, if not a hyperinflation as John Williams puts forward fairly well in his latest special report from 2 December. We are still skeptical of that outcome.

Gold Daily Chart

We had a dead hit on the target of 1225, and the market seems to be withdrawing with stocks ahead of the US Non-Farm Payrolls Report.

If this is to be a normal pullback in this uptrend, then we would expect to see the 1190 level hold on the daily close. We would then look for a consolidation.

If this is to be a correction of the rally, then a pullback no greater than 50% of the breakout would be normal.

If there is to be a test of the breakout support around 1170, then it could be a rare buying opportunity if it holds and forms a bottom.

Our longer term target for gold is much higher than this.

Gold Chart Weekly Updated - Taking Some Profits

Gold bullion is nearing our intermediate price objective for the breakout which we have been following since US$1,020 per ounce. Here is the updated chart. Please note that these chart formations set minimum measuring objectives, but not 'tops' as in limits.



Trading discipline would suggest taking the initial investment off the table here, but let at least some, if not most, of the trading profits run. The daily chart has a higher objective of around US$1,250 and we may very well see an intra-week push up to that level before the end of the year.

Tim and Ben seem determined to inflate an asset bubble, and a continuation into the year end and beyond is certainly not out of the question. The Fed established its repuation for recklessness in the bubble which they inflated from 2003 to 2007, which manifested in stocks and housing. Have they learned any lessons? It seems like only new ways of doing the same old things, and on a grander scale. Larry and Ben have not had an original thought since 1994, and Timmy is a 'useful pair of hands.'

We are entering the period when we would start to anticipate a pullback and consolidation, at least, if not a correction in what has been an extraordinary run. We would prefer this, than a parabolic high. But we have to emphasize that the formation on the charts is a measuring objective, a target if you will, but not necessarily a top.

Mitigating our outlook is the apparent attempt by the US monetary powers to inflate the equity bubble, possibly into year end. Otherwise the fundamentals on many of the financial instruments are looking a bit frothy.

While we do not touch our long term metals positions, as we have not done since 2001, we will vary the trades and leverage as the intermediate situation indicates. But it should be clear that our trading suits our particular age and outlook, and financial condition and needs, and quite frankly, nerves.

And our nerves are getting old, and the markets in general seem a bit 'on the edge.' Le Patron's capacity for risk tolerance is not as vibrant as in day's long past. Although we do confess to a restless desire to short the US equity market, and waiting is becoming an act of will.

Investors who are more aggressive or conservative, with differing time frames, will best seek individual investment advice as always from a qualified advisor (especially if you can find one who is thinking 'out of the box' that is.) We cannot and do not give any individual counsel, and merely look at the markets themselves, and discuss generic trading tactics, and sometimes our own positions.

Despite a very recent surge in popularity, gold and silver are hardly mainstream investments, and few understand them. This will change. But it has not changed yet.

We want to emphasize that 1225 is NOT our ultimate price objective or a top call. This is a minimum measuring objective from the breakout from an ascending triangle of 1225 on the weekly chart. IF you accept that an inverse H&S pattern can be a consolidation pattern, then 1275 is the minimum measuring objective.

What is our ultimate price? Well, to answer that, we would have to know how thoroughly the Fed and Treasury intend to debase the dollar. Further, we would need to have a honest accounting of the gold holdings of the US, and any allocations or encumbrances on them from leasing activity.

Without such knowledge forecasting a 'top' is difficult. But for now here is one target price from a favorite analyst, David Rosenberg.

America's Lost Decade in Equities

For the first time since the 1930's this decade represents negative returns for the SP500. Remarkably this chart represents nominal total returns.

Adjusted for the weaker dollar and inflation, the 'buy and hold' philosophy, especially for those nearing their retirements, has been a disaster. But it has been great times for speculators and insiders and the productive economy.

Part of the problem is with the 401k concept as a supplement if not replacement for pensions and savings, as well as portfolios for educational purposes. Their implementation offers too few choices for the average person. Do you wish to buy corporate stocks or corporate bonds? Or money market funds where the value is not guaranteed? Short term Treasuries, if you are fortunate.

The piling into corporate bonds in the US today may be in part driven by this lack of genuine choice, the seeking for 'conservative choices' and is setting up the many for staggering losses in the event that stagflation does indeed occur. Bond funds are no safe havens.

Two tax reforms, or at least stimulus, that the US might consider is increasing the annual allowance of $3,000 which the taxpayer may claim from prior capital losses against current income. The amount has been the same for many years, and an increase would help the average person clean their books up a bit. A second program might be stimulus, in allowing the average person to take for example $10,000 out of their IRA or 401k tax free for one time.

The Reformer will not do anything that does not benefit Wall Street, but if the US wishes to obtain some serious reforms in its financial system there is a rich ground to sow the seeds of renewal, given the neglect and abuse of the last twenty years.

The banks must be restrained, and the financial system reformed, and balance restored to the economy before there can be any sustained recovery.

Going the Way of AIG with Dollar Holders as Patsies

The Guidotti-Greenspan rule states that a nation's reserves should equal short-term (one-year or less maturity) external (foreign) debt, implying a ratio of reserves-to-short term debt of 1. The rationale is that countries should have enough reserves to resist a massive withdrawal of short term foreign capital.

The rule is named after Pablo Guidotti – Argentine former deputy minister of finance – and Alan Greenspan –former chairman of the Federal Reserve Board of the United States. Guidotti first stated the rule in a G-33 seminar in 1999, while Greenspan widely publicized it in a speech at the World Bank (Greenspan, 1999).

Guzman Calafell and Padilla del Bosque (2002) found that the ratio of reserves to external debt is a relevant predictor of an external crisis.

This is an interesting application of the Greenspan-Guidotti Rule by Porter Stansberry below because it includes the value of the gold at market prices, as well as the oil in the Strategic Petroleum Reserve, and all the foreign reserves on the books of the US against the total foreign debt owed in using the Greenspan-Guidotti rule for its default assessment.

Those who argue for a stronger dollar because of deflation due to domestic credit destruction overlook the reality of the yawning imablance of US debt to external creditors, and the need to deal with it without writing it off like a home mortage.

Yes, the US has lots of buildings, and minerals in the ground, and forests and proprietary software, and overpriced financial assets, and tranches of dodgy mortgages to sell. We are discussing AAA liquid assets here, without significant counterparty risk. Those peddling US debt instruments to Asia these days are getting a very cold reception.

What Porter Stansberry says is valid, with the important exception that the US still owns the world's reserve currency. Otherwise it would be well on its way to a hyperinflationary climax.

This is why we do not expect the default to be like the Lehman Brothers over-weekend implosion, nor as dramatic as the crisis in Dubai, or more historically the failure of the post-Soviet Russia. The US is too big to fail.

The dollar will devalue to unexpected lows, not with a bang but a whimper.

More AIG than Lehman, with high profile big-talking executives, self-serving accounting, bonuses to the perpetrators, de facto bailout and subsidies from frightened central bankers, and all that until the rest of the world can adjust. The US will most likely wallow in stagflation until it can get itself together again, barring a global conflict.

There are structural issues for sure. The US is still the consumer of the world's export products, especially manufactured goods. The problem is that they are paying for it with paper that is increasingly worthless. And it is militarily the only remaining superpower.

Do not expect this to be a straightfoward default. The US money center banks are wielding weapons of financial mass destruction, and are not afraid of gooning it up in the markets for real products, as they still exercise significant pricing power.

It may be our currency, but it's your problem.'' John Connolly, Treasury Secretary, in response to European anger at the 1971 US gold default

So, it will take time for the exporting nations to grow their domestic markets, and to find new customers at home and abroad. It will take time for the nations to agree on a new currency regime, as the US has now pulled the rug out from under them once again with the quantitative easing of the dollar. But that adjustment effort is now well underway. With regard to change, "It is not necessary to change. Your survival is not mandatory." - W. Edwards Deming

The downside of structural change after a long decline is that once it occurs, it is difficult to obtain one's prior reputation and position.

"When governments go bankrupt it's called "a default." Currency speculators figured out how to accurately predict when a country would default. Two well-known economists - Alan Greenspan and Pablo Guidotti - published the secret formula in a 1999 academic paper. That's why the formula is called the Greenspan-Guidotti rule.

The rule states: To avoid a default, countries should maintain hard currency reserves equal to at least 100% of their short-term foreign debt maturities. The world's largest money management firm, PIMCO, explains the rule this way: "The minimum benchmark of reserves equal to at least 100% of short-term external debt is known as the Greenspan-Guidotti rule. Greenspan-Guidotti is perhaps the single concept of reserve adequacy that has the most adherents and empirical support."

The principle behind the rule is simple. If you can't pay off all of your foreign debts in the next 12 months, you're a terrible credit risk. Speculators are going to target your bonds and your currency, making it impossible to refinance your debts. A default is assured.

So how does America rank on the Greenspan-Guidotti scale? It's a guaranteed default.

The U.S. holds gold, oil, and foreign currency in reserve. The U.S. has 8,133.5 metric tonnes of gold (it is the world's largest holder). That's 16,267,000 pounds. At current dollar values, it's worth around $300 billion. The U.S. strategic petroleum reserve shows a current total position of 725 million barrels. At current dollar prices, that's roughly $58 billion worth of oil. And according to the IMF, the U.S. has $136 billion in foreign currency reserves. So altogether... that's around $500 billion of reserves. Our short-term foreign debts are far bigger."

Porter Stansberry, The bankruptcy of the United States is now certain

Davidowitz: What Recovery? The US Consumer Is Struggling

Howard Davidowitz is our favorite retail analyst.

Appearance versus Reality is the theme in the Enron Nation.



And Winners of the Retail Apocalypse: Amazon, Walmart, Kohls and Dollar Tree.
Personally I like Costco, Amazon, and Lowes, because even thought they may not have the very lowest price, they provide exceptional value and a little something 'extra.'

David is probably right, because She-Who-Shops says he is, and is a hands-on expert.

Gold, the Comex and Exchange For Physical

This report below comes from John Cheney of Service Analytics.

We would not conclude that you cannot get gold from the Comex in the exercise of your futures contract. "Cash settled" is nothing new, and we ourselves have done this in the past. But we have been speaking with other traders and funds, and some are spotting a trend.

Comex is putting forward the offer of paper in the form of money or ETF positions aggressively, and it is the much easier alternative. Delivery of physical gold from the Comex is no longer as straightforward or even as semi-convenient as it had been in the past. In fact, it is difficult, and one must be persistent and wait long periods of time. At least, this is what we hear.

We would like to know if there has been a recent independent audit of the Comex stores, with a clean sheet of bar numbers and the status of same. From what we hear it is a mess, as bad or worse as the recent scandal in Canada and the 'missing bullion.'

"Some months ago a chap described changes in the comex rules for futures contract deliveries. Therein it was described that the EFP, exchange for physical, rules were amended to allow for delivery of GLD shares in lieu of bullion.

Well take a look at something new, at least for me, in Monday’s comex preliminary volume and open interest report. On page 3 of the attachment, notice that in addition to futures contracts listed under the EFP category, a new category is listed: “Delivery Cash Settled” = 2866 december gold contracts. Just so happens 2866 was exactly the number of delivery notices issued on FND as reported in the Nov 27 vol and op int report.

Conclusion: guess you can no longer get bullion via using comex contracts. This apparently is the next step in the evolution of gold trading."

The conclusion we reach for now is that if one is counting on the ability to receive delivery of physical gold from the Comex for whatever purposes, then don’t. You will wait and fight and stand in queue to obtain the goods from the Enron nation.

But one principle we have learned over the years is never to attribute to bad intents what can be attributed to human error and mismanagement.

Morgan Stanley Fears UK Default in 2010

As you may recall we are bears on sterling, and view the UK as the Iceland of the G20.

The monetary policies of the Bank of England were as bad as those of the Greenspan - Bernanke Fed. The difference is that the UK does not hold the world's reserve currency as a captive source of revenues.

As an aside, we see that Bank of England advisor and economic franc-tireur Willem Buiter has decided to seek greener pastures as chief economist with Citi in the States. Timely exit. Bravo, Willem.

It is sad to see a great people brought low by irresponsible leadership and economic recklessness. Perhaps there will be a movement to bring in a reform government. Hint, ask for details first, as the Yanks are finding out to their dismay as they experience continuity they can hardly believe.

UK Telegraph
Morgan Stanley fears UK sovereign debt crisis in 2010
By Ambrose Evans-Pritchard
4:09PM GMT 30 Nov 2009

Britain risks becoming the first country in the G10 bloc of major economies to risk capital flight and a full-blown debt crisis over coming months, according to a client note by Morgan Stanley.

The US investment bank said there is a danger Britain’s toxic mix of problems will come to a head as soon as next year, triggered by fears that Westminster may prove unable to restore fiscal credibility.

“Growing fears over a hung parliament would likely weigh on both the currency and gilt yields as it would represent something of a leap into the unknown, and would increase the probability that some of the rating agencies remove the UK's AAA status,” said the report, written by the bank’s European investment team of Ronan Carr, Teun Draaisma, and Graham Secker.

In an extreme situation a fiscal crisis could lead to some domestic capital flight, severe pound weakness and a sell-off in UK government bonds. The Bank of England may feel forced to hike rates to shore up confidence in monetary policy and stabilize the currency, threatening the fragile economic recovery,” they said.

Morgan Stanley said that such a chain of events could drive up yields on 10-year UK gilts by 150 basis points. This would raise borrowing costs to well over 5pc - the sort of level now confronting Greece, and far higher than costs for Italy, Mexico, or Brazil.

High-grade debt from companies such as BP, GSK, or Tesco might command a lower risk premium than UK sovereign debt, once an unthinkable state of affairs.

A spike in bond yields would greatly complicate the task of funding Britain’s budget deficit, expected to be the worst of the OECD group next year at 13.3pc of GDP.

Investors have been fretting privately for some time that the Bank might have to raise rates before it is ready -- risking a double-dip recession, and an incipient compound-debt spiral – but this the first time a major global investment house has issued such a stark warning.

No G10 country has seen its ability to provide emergency stimulus seriously constrained by outside forces since the credit crisis began. It is unclear how markets would respond if they began to question the efficacy of state power.

Morgan Stanley said sterling may fall a further 10pc in trade-weighted terms. This would complete the steepest slide in the pound since the industrial revolution, exceeding the 30pc drop from peak to trough after Britain was driven off the Gold Standard in cataclysmic circumstances in 1931.

UK equities would perform reasonably well. Some 65pc of earnings from FTSE companies come from overseas, so they would enjoy a currency windfall gain.

While the report – “Tougher Times in 2010” – is not linked to the Dubai debacle, it is a reminder that countries merely bought time during the crisis by resorting to fiscal stimulus and shunting private losses onto public books. The rescues – though necessary – have not resolved the underlying debt problem. They have storied up a second set of difficulties by degrading sovereign debt across much of the world...

Will AIG Be Able to Pay Your Insurance Claim If Needed?

"Sanford Bernstein analyst Todd Bault said AIG is facing an $11 billion shortfall to cover potential claims in its property and casualty insurance business, according to media reports Monday."

The public has been reassured repeatedly that AIG's troubles with exotic financial instruments written by its London division at the behest of some of the Wall Street banks could not affect its personal and commercial insurance business which is regulated by the states.

We have raised the issue in the past that corporations such as AIG, with its exposure to individual and small business insurance claims and annuities, have no business engaging in raw financial speculation with a commingling of liabilities and risks. At one time AIG was a major speculator in the silver markets, holding enormous short positions along with a few of the Wall Street commercial banks.

Banks and insurance companies have absolutely no business engaging in financial speculation that exposes its non-qualified investors and depositors to risk of loss that has not been fully disclosed. It is the job of the government regulators to prevent this from happening in the first place as part of the corporate licensing process. Period.

We freely admit that we do not understand the exact structure of AIG's interwoven obligations and corporate structure, who owes what, what is safe and what is not. It is not clear to us who does understand it, except to say that it is a massive conglomerate, and that there are investments and speculations and commercial enterprises that have absolutely no business being in the same portfolio as others from a risk profile. The same goes for the money center banks. These companies look more like pyramid schemes serving their management to the detriment of shareholders and customers.

AIG ought to have been broken up and taken through a restructuring process, and the commercial business fully capitalized and separated from its speculative operations first, before anyone was paid with government funds, including enormous employee bonuses and full payments to counterparties in financial speculation like Goldman Sachs.

If the financial insiders were paid, and individuals are left high and dry on car and life insurance and retirment annuities, there will be hell to pay, of this we are certain.

AP
AIG shares decline amid reports of shortfall in insurance reserves
Monday November 30, 2009

NEW YORK (AP) -- Shares of American International Group Inc. tumbled nearly 15 percent Monday after an analyst stirred concerns that the troubled insurer doesn't have enough reserves to pay some potential claims.

AIG shares dropped $4.90, or 14.7 percent, to finish at $28.40 -- their lowest close since August 19. The shares have more than quadrupled from a low of $6.60 in March.

Sanford Bernstein analyst Todd Bault said AIG is facing an $11 billion shortfall to cover potential claims in its property and casualty insurance business, according to media reports Monday. Bault declined to share the research note.

Covering that shortfall could cause problems for the New York-based insurer as it tries to repay a government bailout package it received to help stay in business.

Separately, the Financial Times reported AIG may soon get a bid for a part of its aircraft leasing unit from a group that includes the head of that business.

A spokeswoman for AIG, which is based in New York, declined to comment on either report...


NY Times
Report Cites Big Shortfall In Reserves At A.I.G.
By MARY WILLIAMS WALSH
November 30, 2009

An independent analysis of whether the insurance industry has been setting aside enough money to pay its claims estimates that the American International Group has a shortfall of $11.9 billion in its property and casualty business.

The conclusion is at odds with the often-repeated refrain that A.I.G.’s troubles can all be traced to its derivatives portfolio, and that its insurance operations are sound.

Other researchers have raised doubts about A.I.G.’s total worth since it was bailed out last year, and even the federal government has acknowledged that the company might have difficulty repaying all the money it owed taxpayers, currently about $120 billion.

In a report distributed to clients on Monday, the investment research firm Sanford C. Bernstein pointed to a big shortfall in A.I.G.’s property and casualty insurance business — which has been renamed Chartis and is intended to be the future core of the company’s operations.

The stock fell by almost 15 percent, to $28.40 from $33.30, in trading on Monday. Bernstein cut A.I.G.’s price target by 40 percent, to $12 from $20. The report’s author, Todd R. Bault, called the results “a big surprise.” He also said the inadequacy of A.I.G.’s reserves had grown in recent years — “nearly the opposite behavior that we would expect,” since the claims-paying reserves of other insurance companies had been growing...

Customers Frequently Asked Questions

1. Is my insurance policy safe?
Yes, your insurance policy is safe. Our insurance companies remain strong and well-capitalized. Regulations ensure that the assets of our insurance companies are there to back up each policy. You are protected. Your policy is safe.

2. If I have a claim, will it be paid?
Yes, our insurance companies are able to pay all valid claims. As stated above, our insurance companies are financially strong and are not in jeopardy.

3. Should I cancel my insurance policy?
Your insurance policy is safe. As stated above, our insurance companies are financially strong so your policies are not in jeopardy. Please be aware that some policies may contain surrender charges and/or cancellation penalties. Talk to your financial advisor before making any decision.

4. Should I get out of my annuity?
Your annuity is underwritten by one of the AIG insurance companies. Our insurance companies are financially sound and well-capitalized. Please be aware that some annuities may contain surrender charges. Talk to your financial advisor before making any decision.

5. I just heard that AIG is selling the company that issued my insurance policy. What should I do?
You don't have to do anything. Your policy remains safe and intact. Your policy will be seamlessly transferred to the company that buys the subsidiary.

6. Should I pay the insurance premium bill I just received?
Yes, in order for your coverage with us to continue, you will need to pay the insurance premium.

SP 500 Futures Daily Chart

Stocks are being managed on light volumes.

At most times the markets are price discovery and capital allocation mechanisms.

Under the current Bernanke-Summers regime, they have become instruments of financial engineering, the shaping of perception, and government influence.

Draining the Swamp: The Fed's Tri Party Repo Machine

A triparty repo transaction is a transaction among three parties: a cash lender acting on behalf of all holders of dollars (the Fed), a borrower that will provide collateral (dodgy debt holder in shaky financial condition), and a clearing bank, most likely a primary dealer like J.P. Morgan, which is only too happy to collect its fees as an agent of the Fed.

The triparty clearing bank provides custody (agency) accounts for parties to the repo deal and collateral management services. These services include ensuring that pledged collateral meets the cash lenders’ requirements, pricing collateral, ensuring collateral sufficiency, and moving cash and collateral between the parties’ accounts. What if any liabilities the clearing bank such as J.P.Morgan might obtain for the mispricing of risk remain undisclosed, but are probably negligible at worst.

This is the method of obtaining toxic assets from the books of non-primary dealers, and providing stability and liquidity from the aggregate value of all dollar holders to cover the misdeeds of diverse financial institutions and other favored parties.

In other words, the Fed is draining the financial debt swamp and toxic waste dumps into your basement, if you hold Federal Reserve Notes. Your IRA's, your 401k's, your savings, as long as you hold Federal Reserve Notes, which are claims on their balance sheet loosely backed by the Treasury. When the Fed's balance sheet contained nothing but Treasuries and explicity backed agencies that relationship was firmer. Now, we are into the realm of make believe and Timmy's credibility.

The Fed pledges Morgan assure them that there will be no radioactive material in the sludge pond headed your way, and levels of carcinogenic and toxic contamination will be within levels that they believe are adequate based on the non-binding estimates.

In practice the Fed has a defaults account on its book for the shortfalls from fat valuations due to the toxic debt it has already assumed on your behalf.

The source and composition of the sludge will remain a secret among the bankers, without oversight. This seems like taxation without representation, at least for holders of dollars that are US citizens, since the Fed is engaging in the expenditure of public money without hearings, votes, public oversight, or controls. The Fed seeks to become a financial Star Chamber, dispensing 'justice' as it pleases.

WSJ
Tri-Party Repo Could See 1st Round Of Reforms By Year-End
By Deborah Lynn Blumberg
NOVEMBER 30, 2009, 5:20 P.M. ET.

NEW YORK (Dow Jones)--Progress is being made in reaching agreement on a first round of reforms for the crucial tri-party repo market and details could be revealed as early as the end of this year, according to people familiar with ongoing discussions.

The reforms, which focus on margin requirements and intraday credit, are a first step in making security repurchase transactions more secure and preventing this $4.3 trillion over-the-counter market, where firms raise cash against collateral, from becoming a source of instability for the broader financial system.

They also come at a time when the repo market will be in the spotlight as the Fed plans for the day when it will start to pull the massive amounts of cash it has extended to markets from the system. The Fed is planning to use reverse repo operations--selling dealers securities such as Treasurys for cash with the agreement to buy them back later at a higher price--as one tool to achieve that goal.

The drive to reform the repo market--whose smooth functioning is key to the health of the financial system--has recently gained traction, in part due to the expiry of the Fed's primary dealer credit facility in February 2010. The facility serves as the current borrowing backstop for the big banks that deal directly with the central bank. Without it, the banks will have to rely more on repo for funding, which adds to the need to strengthen its functioning.

According to one person involved with the talks, the New York Fed-sponsored Tri-Party Repurchase Agreement Infrastucture Task Force could issue a progress report on repo reform discussions and seek feedback from the broader market as early as December.

The New York Fed was unavailable for comment.

The reforms will focus on the tri-party repo market, which makes up the biggest chunk of the repo market. In this market, a clearing bank stands between the borrower and the lender, holding collateral and facilitating the trades. The two dominant clearing banks in the U.S. are J.P. Morgan Chase & Co. (JPM) and the Bank of New York (BK).

In a first step, reform will focus on steps that market participants can address without outside input: standardizing margin requirements and tackling the issue of the intraday extension of credit in the market. Longer-term reforms to reduce systemic risk in tri-party repo are still being debated.

Standardized, or minimum margin requirements, would add security for the two clearing banks. Higher margins could be required for certain types of securities, such as commercial paper, or high-yield debt, or for riskier banks.

Intraday credit has also been a top concern. Currently, for operational efficiency, the two clearing banks extend intraday credit on term repos, or repos longer than overnight, meaning they return cash to the lender and securities to the borrower each day even though the contract continues to run. That leaves the clearing bank on the line should either counterparty falter.

One possible solution is to bring the U.S. term repo market more in line with overseas markets, by not allowing term repos using less liquid securities, such as corporate debt, to unwind every day. Other transactions, such as those using the more liquid Treasury securities, would still unwind every day.

The need for repo reforms has been apparent to policymakers for years, but was paid greater heed after severe disruptions in the market during the recent financial crisis.

Borrowers, lenders, clearers, industry groups and the Fed came together in September to form the repo task force and have been meeting every few weeks since then. Members have been working on crafting an initial set of reforms that would help to protect the tri-party repo market from future financial market disruptions.

The Dangerous US Financial Sector Is Still Smoldering and May Reignite

Timmy and the Merry Pranksters at the Treasury and the Fed are throwing taxpayer money at the financial sector with the same prudence with which Angelo Mozilo used sunblock.

Smothered by paper, the fire in the financials is still smoldering, and could reignite with the breezes of further credit contractions in commercial real estate, mortgage foreclosures, and frothy debt in the developing world.

When the US financial system tumbles there should be little doubt where Ben, Tim, Larry, and their Boss failed the American taxpayer and all holders of US debt.

The ratings fraud and accounting deception will continue until confidence is restored.


Barron's
More Nasty Bank Surprises
By JIM MCTAGUE
November 28, 2009

THERE'S GROWING EVIDENCE THAT THE CASE FOR buying financial stocks is larded with "bulloney." Recent indications are that bank regulators from the Treasury to the Federal Reserve to the Federal Deposit Insurance Corporation and on to the state level remain in the dark about the quality of bank-loan portfolios -- especially at small to midsize institutions. An estimated 21 publicly traded banks that have received TARP injections are on the ropes, according to published reports. The number likely will grow, leading to some nasty surprises for investors.

Because of the political antipathy toward Wall Street, the consensus is that any Congressional financial regulatory reform bill will be punitive in the extreme and consequently inhibit the growth and profitability of the sector for years to come. This hardly is a buy signal.

The latest and perhaps most startling evidence of endemic regulatory weakness is the failure this month of two banks and the bankruptcy of CIT, all recipients of TARP funds from Treasury after they were deemed earlier in the year by "expert" regulators to be safe and sound. CIT received $2.3 billion in taxpayers-financed TARP funds; UCBH Holdings, parent of San Francisco's United Commerce Bank, received $299 million; and Pacific Coast National Bank, a San Clemente, Calif., lender, received $4.1 million. All were publicly traded.

The aforementioned 21 wobbly publicly traded companies that have received TARP money had zero or negative net income. They've suspended dividend payments to the Treasury. Regulators vetted all of these institutions, using the "CAMELS" rating system. CAMELS stands for "Capital, Asset quality, Management, Earnings, Liquidity, and Sensitivity (which measures interest-rate risk, exchange-rate risk, and other market risk). Each bank's CAMELS score is secret. Banks with the lowest scores were excluded from TARP. Those with the highest scores were fast-tracked. Banks with average CAMELS scores received the most extensive vetting. They were recommended by their primary regulators for review by a panel of experts from the FDIC, the Fed and the Office of the Comptroller of the Currency. The panel then forwarded the case file on to the Treasury.

Some of the TARP awards seem outlandish. Linus Wilson, an assistant professor of finance at the University of Louisiana, points out that CIT Group's preferred stock was yielding an astronomical 20% before it received a TARP investment intended for healthy banks. The regulators demanded dividends on the TARP money of just 5%. Wilson says that regulators should have been able to determine in five minutes that this return was far too low to compensate taxpayers for the risk.

No surprise then that regulators recently determined that $5.1 billion in TARP funds are not in healthy banks but rather in banks that have failed or, may soon fail.

As for legislation, be assured it will toughen oversight, increase capital requirements and enhance consumer protection. Profits will shrink. The universe of financial institutions will contract. Here's hoping that you are better than regulators at picking winners from losers.

The 38 Year Cycle in US Monetary History

I am not a big believer in comprehensive cycle theory. The weakness of cycles is the same as all systems that seek to impose an external order on natural events and occurrences: one can always find something to fit in a less than rigorously defined methodology. This applies from biblical prophecy codes based on the placement of words and letters, to cycle and wave theories with a wide range of alternatives.

However, I also believe in what call 'generational memory.'  People as a group often forget the lessons of the past, and human nature being what it is, events based on bad judgement and reckless behaviour seem to recur at regular intervals.  Or as J.K.Galbraith observed, there are essentially no new financial frauds, just new variations on the established themes.

If there was any 'tell' for the current crisis, it was the general overturning of the safeguards for the financial system that had been put in place in the aftermath of the financial panic of 1929 and the Great Depression that followed, culminating in the eventual overturn of Glass-Steagall and the ascendancy of extreme leverage using exotic, unregulated instruments.

This is why we call this a generational change. This is no slump, and not even a common recession. And it is far from over.

We are experiencing some major changes that are easily lost when one only looks at the day to day moves, listens to the description of events on the mainstream media, and of course, have a lack of memory, a knowledge of history, of things that have happened to their grandfathers and great grandfathers. The arrogant ignorance of so many still in place is a sure sign of greater chastisement to come, until the lessons of history are learned again, and the system is brought back into a sustainable balance.

2009

The story is still being written, and history will have its say over time. But it will likely include the reckless expansion of credit by the Greenspan Fed, the lapses in financial regulation, the overturn of Glass-Steagall, and the financial scandals including LTCM, Enron, Worldcom, culminating in the failure of the US banking system which began in 2007 including the de facto nationalization of the banks.

The loss of confidence in the informal Bretton Woods II arrangement with the dollar as the world's reserve currence with the rise of alternatives, precipitated by the unprecedented expansion of the monetary base by the Bernanke Fed including the monetization of private debts, will be the hallmark of the crisis from a monetary perspective.

1971

Nixon Closes the Gold Window on Bretton Woods

"The Nixon Shock was a series of economic measures taken by U.S. President Richard Nixon in 1971 including unilaterally canceling the direct convertibility of the United States dollar to gold that essentially ended the existing Bretton Woods system of international financial exchange.

By the early 1970s, as the costs of the Vietnam War and increased domestic spending accelerated inflation, the U.S. was running a balance of payments deficit and a trade deficit, the first in the 20th century. The year 1970 was the crucial turning point, which, because of foreign arbitrage of the U.S. dollar, caused governmental gold coverage of the paper dollar to decline 33 percentage points, from 55% to 22%. That, in the view of Neoclassical Economists and the Austrian School, represented the point where holders of the U.S. dollar lost faith in the U.S. government’s ability to cut
its budget and trade deficits.

In 1971, the U.S. government again printed more dollars (a 10% increase) and then sent them overseas, to pay for the nation's military spending particularly in Vietnam and private investments. In May 1971, inflation-wary West Germany was the first member country to leave the Bretton Woods system — unwilling to deflate the deutsche mark to prop up the dollar.

Because of the excess printed dollars, and the negative U.S. trade balance, other nations began demanding fulfillment of America’s “promise to pay” - that is, the redemption of their dollars for gold. On 5 August 1971, Congress released a report recommending devaluation of the dollar, in an effort to protect the dollar against foreign speculators.

To stabilize the economy and combat runaway inflation, on August 15, 1971, President Nixon imposed a 90-day wage and price freeze, a 10 per cent import surcharge, and, most importantly, “closed the gold window”, ending convertibility between US dollars and gold. The President and fifteen advisors made that decision without consulting the members of the international monetary system, thus the
international community informally named it the Nixon shock.

Given the importance of the announcement — and its impact upon foreign currencies — presidential advisors recalled that they spent more time deciding when to publicly announce the controversial plan, than they spent creating the plan. He was advised that the practical decision was to make an announcement before the stock markets opened on Monday (and just when Asian markets also were opening trading for the day). On August 15, 1971, that speech and the price-control plans proved very popular and raised the public's spirit. The President was credited with finally rescuing the American public from price-gougers, and from a foreign-caused exchange crisis." Wikipedia

1933 - 1934

Suspension of the Gold Standard and Dollar Devaluation

"In early 1933, in order to fight severe deflation Congress and President Roosevelt implemented a series of Acts of Congress and Executive Orders which suspended the gold standard except for foreign exchange, revoked gold as universal legal tender for debts, and banned private ownership of significant amounts of gold coin. These acts included Executive Order 6073, the Emergency Banking Act, Executive Order 6102, Executive Order 6111, the Agricultural Adjustment Act, 1933 Banking Act, House Joint Resolution 192, and later the Gold Reserve Act. This set up the devaluation of the dollar. In early 1934 F.D.R. increased the price of gold by 69%($20.67 to $35/oz). This represented a 41% devaluation of the US dollar." Dollar Devaluation in 1934, I. M. Vronsky

1895

Gold Panic: U.S. Gold Supply Running Dry

"The early 1890s were not kind to America's gold reserves...Coupled with declining revenues triggered by various protective tariffs, the reserves plummeted, taking a severe toll on the economy. In 1893, the falling gold supply helped spark a debilitating financial crisis known as the Panic of 1893...By February 8, 1895, the gold supplies had thinned out to a paltry $41 million.

With the U.S. Treasury teetering on the brink of bankruptcy, Cleveland intervened, and using a syndicate led by J.P. Morgan as an intermediary and U.S. bonds as bait, attempted to buy back gold from foreign investors. Cleveland sold roughly sixty-two million dollars worth of bonds, valued at 3.75 percent, to Morgan's syndicate. Morgan and company in turn shopped the issues to foreign parties for a handsome profit. Although clearly borne of desperation, the deal nonetheless provided some badly needed relief: it briefly spelled the gold crunch and saved the Treasury from disaster. " This Day in History

1857

The Panic of 1857

"The Panic of 1857 abruptly ended the boom times that followed the Mexican War. The immediate event that touched off the panic was the failure of the New York branch of the Ohio Life Insurance and Trust Co., a major financial force that collapsed following massive embezzlement. Hard on the heels of this event arrived other setbacks that shook the public's confidence...

Widespread railroad failures occurred, an indication of how badly over-built the American system had become. Land speculation programs collapsed with the railroads, ruining thousands of investors.

Confidence was further shaken in September when 30,000 pounds of gold were lost at sea in a shipment from the San Francisco Mint to eastern banks. More than 400 lives were lost as well as a loss of public confidence in the government's ability to back its paper currency with specie.

In October, a bank holiday was declared in New England and New York in a vain effort to avert runs on those institutions. Eventually the panic and depression spread to Europe, South America and the Far East. No recovery was evident in the United States for a year and a half and the full impact did not dissipate until the Civil War."

1819

The Panic of 1819

"The causes of the Panic of 1819 were the first to largely originate within the U.S. economy. The resulting crisis caused widespread foreclosures, bank failures, unemployment, and a slump in agriculture and manufacturing. It marked the end of the economic expansion that had followed the War of 1812. However, things would change for the US economy after the Second Bank of the United States was founded in 1816, in response to the spread of bank notes across United States from private banks, due to inflation brought on by the debt following the war.

In the event, President Monroe, interpreting the economic crisis in the narrow monetary terms then current, limited governmental action to economizing and ensuring fiscal stability. He acquiesced in suspension of specie (gold) payments to bank depositors, setting a precedent for the Panics of 1837 and 1857."

Mark Pittman, Investigative Journalist

Bloomberg
Mark Pittman, Reporter Who Foresaw Subprime Crisis, Dies at 52
By Bob Ivry

Nov. 28 (Bloomberg) -- Mark Pittman, the award-winning investigative reporter whose fight to open the Federal Reserve to more scrutiny led Bloomberg News to sue the central bank and win, died Nov. 25 in Yonkers, New York. He was 52.

Pittman suffered from heart-related illnesses. The precise cause of his death wasn’t known, said his friend William Karesh, vice president of the Global Health Program at the Bronx, New York-based Wildlife Conservation Society.

A former police-beat reporter who joined Bloomberg News in 1997, Pittman wrote stories in 2007 predicting the collapse of the banking system. That year, he won the Gerald Loeb Award from the UCLA Anderson School of Management, the highest accolade in financial journalism, for “Wall Street’s Faustian Bargain,” a series of articles on the breakdown of the U.S. mortgage industry.

“He was one of the great financial journalists of our time,” said Joseph Stiglitz, a professor at Columbia University in New York and the winner of the 2001 Nobel Prize for economics. “His death is shocking.”

Pittman’s fight to make the Fed more accountable resulted in an Aug. 24 victory in Manhattan Federal Court affirming the public’s right to know about the central bank’s more than $2 trillion in loans to financial firms. He drew the attention of filmmakers Andrew and Leslie Cockburn, who gave him a prominent role in their documentary about subprime mortgages, “American Casino,” which was shown at New York City’s Tribeca Film Festival in May.

‘One Reporter’

“Who sues the Fed? One reporter on the planet,” said Emma Moody, a Wall Street Journal editor who worked with Pittman at Bloomberg. “The more complex the issue, the more he wanted to dig into it. Years ago, he forced us to learn what a credit- default swap was. He dragged us kicking and screaming.”

James Mark Pittman was born Oct. 25, 1957, in Kansas City, Kansas, where he played linebacker on the high school football team. He took engineering classes at the University of Kansas in Lawrence before graduating with a degree in journalism in 1981. He was married soon after and had a daughter, Maggie, in 1983. The marriage ended in divorce.

Pittman’s first reporting job, covering the police department for the Coffeyville Journal in southern Kansas, paid so little he took a part-time job as a ranch hand across the Oklahoma border in Lenapah, according to an interview he gave to Ryan Chittum for the Columbia Journalism Review’s The Audit, a watchdog for the business press.

‘Huge Personality’

“What a funny guy -- huge personality,” Chittum said in an e-mail message. “Mark was my favorite reporter working. In a time when too much journalism is timid or co-opted, Mark personified the whole ‘afflict the comfortable’ tenet of the business. Mark’s passing is a huge loss for journalism at a time when we can least afford it.”

Pittman spent a year in Rochester, New York, with the Democrat & Chronicle newspaper and 12 years at the Times Herald- Record in Middletown, New York, where he met his second wife, Laura Fahrenthold-Pittman in 1995.

“All I know is we fell in love the moment we met,” Fahrenthold-Pittman said in an interview Friday. “We moved in together a week later. He was as serious about his family life as he was about work. Mark did nothing in a small way.”

Pittman joined Bloomberg News in 1997. In 2007, he was writing about the securitization of home loans when subprime borrowers, who have bad or limited credit histories, began missing payments on their mortgages at a faster pace.

S&P, Moody’s

His June 29, 2007, article, headlined “S&P, Moody’s Hide Rising Risk on $200 Billion of Mortgage Bonds,” was excoriated at the time by Portfolio.com for “trying to play ‘gotcha’ with the ratings agencies.”

“And that really isn’t helpful,” said the unsigned posting.

Pittman’s story proved prescient. So did his reports on U.S. banks exporting toxic mortgages overseas, on Treasury Secretary Henry M. Paulson’s role in creating those troubled assets while he was chief executive officer of Goldman Sachs Group Inc. and on the U.S. bailout of American International Group Inc.

“He’s been on this crisis since before the crisis,” said Gretchen Morgenson, the Pulitzer Prize-winning financial columnist for the New York Times. “He was the best at burrowing into the most complex securities Wall Street could come up with and explaining the implications of them to readers of all levels of sophistication. His investigative work during the crisis set the standard for other reporters everywhere. He was a giant.”

‘Fearless, Trusted’

In the “Faustian Bargain” series, Pittman explained how 5 percent of U.S. mortgage borrowers missing monthly payments could lead to a freeze in lending throughout the world.

“Mark Pittman proved to be the most fearless, most trusted reporter on the most important beat during the 12 years he wrote about credit markets, corporate finance and the Federal Reserve at Bloomberg News,” said Bloomberg Editor-in-Chief Matthew Winkler. “His colleagues will miss his laughter and generous sense of mission. Bloomberg readers were rewarded by his many achievements culminating with a federal court ruling validating his search for records of taxpayer-financed policies withheld from the public and the Gerald Loeb Award.”

Public policy would be more effective if reporters, lawmakers and citizens understood how the financial system worked and why the crisis happened, Pittman said in the Feb. 27, 2009, interview with Chittum.

“Hopefully, we will be able to inform the people enough to know how badly we’re getting screwed,” he said with a laugh. “We need to know how to prevent it from happening again, and we need to know who did it.”

Booming Laugh, Bourbon

Standing 6 feet 4 inches (1.93 meters) with a booming laugh, a loud telephone voice and a taste for bourbon, Pittman made lifelong friends on Wall Street, in Congress, in journalism circles and in the artistic community after he and his wife opened an art gallery in Yonkers in 2005.

“I always learned something new when I spoke with Mark,” said Representative Scott Garrett, a New Jersey Republican on the House Financial Services Committee. “He was dogged in pursuit of the truth. This is a great loss for journalism and for those who relied on Mark for his insight.”

In “American Casino,” the title of which comes from an expression Pittman uses in the documentary, the filmmakers profile subprime borrowers who are losing their homes, mortgage brokers who made loans they knew their customers could never repay and bankers and ratings analysts whose companies profited from the housing boom...