The Mess That Greenspan Made - Part 416

Occupy Main Street

The odds of a government sponsored principal writedown program seem to be increasing by the day, aided by the attention now being focused on the big banks by Occupy Wall Street. If homeowners don’t get their bailout, we’ll be seeing a lot more of this as there are still more than a million homes either already in foreclosure or headed that way.

From the Nick Anderson archive at the Houston Chronicle.

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Another Bad Month for John Paulson

Wall Street’s wunderkind over the last few years, famed billionaire hedge fund manager John Paulson, just seems to keep running into bad luck (or maybe it’s just the results of bad decisions) and disgruntled investors seem to just keep telling the New York Times about it. This report in DealBook provides some of the details:

Tired of incessant leaks to the media about its poor performance, Paulson & Company, the hedge fund started by the billionaire John A. Paulson, decided a few weeks ago to amend its reporting policies to make it harder to obtain performance data.

But the changes failed to obscure this painful fact: one of his largest funds is down 47 percent through September, a loss that would require returns of almost 100 percent to surmount, according to investors in the fund. The nonleveraged version of the same fund is down about 32 percent, according to the investors.

Other funds that were doing fine earlier this year are now also taking a nosedive, including Mr. Paulson’s gold fund ( up 1 percent for the year after falling 16 percent last month), which placed bets on various assets linked to gold, as well as his Recovery fund (down 31 percent for the year), which placed a bet on the recovery of the United States economy. Both funds were hit with double digits losses in September after gold prices fell and stock market volatility continued.

The reporting changes included not allowing investors who don’t own a particular Paulson fund to see the performance of that fund and other similar moves to reduce how much performance data is disseminated to those who really don’t need to see it. All this comes after the big $500 billion loss on a Chinese timber company earlier in the year and an optimistic view of the U.S. banking sector that, so far, has proven to be off the mark.

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Alan Grayson on Occupy Wall Street

The Sunday political shows were jam-packed with talking heads talking about Occupy Wall Street and earlier, on Friday, former U.S. Representative from Florida Alan Grayson appeared on the Bill Maher show to succinctly explain what it is they’re complaining about.

Greyson says, “They’re upset about the fact that Wall Street has iron control over the economic policies of this country and that one party is a wholly owned subsidiary of Wall Street and the other party caters to them as well.” Well put.

Also see this clip of Fox News’ Heraldo Rivera attempting to broadcast from the protest site.

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Monday Morning Links

Embattled Dexia gets huge bailout – BBC
Stock futures gain on French-German pledge – Reuters
Sarkozy and Merkel set a date to save Europe – Telegraph
The Depression: If Only Things Were That Good – NY Times
OECD indicators paint dark picture of global economy – Reuters
Talking Points for the “Occupy Wall Street” -Hussman Funds
The Rising Backlash Against the Rich – Samuelson, Washington Post
The Wall Street Occupiers and the Democratic Party – Reich, HuffPost
FOX News Meets Intelligent Protestor And Doesn’t Air It – Gothamist
Occupy Wall Street Backs a Nationwide Boycott Against Banks – NetNet
Could this time have been different? – Klein, Washington Post
Panic of the Plutocrats – Krugman, NY Times

Oil above $84 on better than expected jobs data – AP
Gold rises 1.5 pct after EU pledge to aid banks – Reuters
Rebound in U.S. Corporate Profits Loses Steam – Bloomberg
Investing: Few places to hide as bear growls – LA Times
Gold to stay strong, top performing funds say – Reuters
Gold supported by strong Asian demand, Q4 price to $1875 – Commodity Online
Inflation, deflation, stagflation – all will benefit the gold price – Mineweb
Paulson loses more in September, fund now off 47 percent – Reuters
Gold, Silver And The US Dollar – Profitimes
The Golden Constant – aucontrarian

Airlines see demand take a dip – USA Today
Feldstein: ‘About as Bad an Expansion as I’ve Ever Seen’ – WSJ
Recession Officially Over, U.S. Incomes Kept Falling – NY Times
Number of the Week: Falling Wages for Young College Grads – WSJ
Trichet Throws Away Script, Reminds Skeptics Euro Built to Last – Bloomberg
Precedents for the rise of the renminbi as an international currency – voxeu
As Its Economy Sprints Ahead, China’s People Are Left Behind – NY Times
China’s cash-strapped small firms ring alarm bells – xinhuanet
China’s debt pileup raises risk of hard landing – Reuters
What is quantitative easing and will it help housing? – Property Talk
Too Big to Fail Not Fixed, Despite Dodd-Frank – Bloomberg
How to Walk Away – HuffPost

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