Telling the truth slowly (Weekend edition)
Some fresh and not-so-fresh reading on current issues of interest.
George Soros got all the headlines at this week’s Senate commerce committee hearing on ‘[Alleged—Ed] Energy Market Manipulation and Federal Enforcement Regimes.’ Largely, and unfortunately, overlooked was the testimony of Michael Greenberger, former head of the Commodity Futures Trading Commission’s division of trading and markets, who ripped the agency for a panoply of sins from blithering incompetence to rank dereliction of duty.
Energy Market Manipulation and Federal Enforcement Regimes
Michael Greenberger
Senate Commerce Committee Jun. 3 2008
Jeffrey Lacker, president of Fred’s Richmond, Va, office, went conspicuously off message yesterday:
Lending when in fact the financial sector is just coping with deteriorating fundamentals, however, distorts economic allocations by artificially supporting the prices of some assets and the liabilities of some market participants. Moreover, it is likely to affect the perceptions of market participants regarding future intervention, and thus alter their incentives and future choices...
...The danger is that the effect of recent credit extension on the incentives of financial market participants might induce greater risk taking, which in turn could give rise to more frequent crises, in which case it might be difficult to resist further expanding the scope of central bank lending.
Financial Stability and Central Banks
Jeffrey M. Lacker
Distinguished Speakers Seminar European Economics and Financial Centre
London, England Jun. 5 2008
(Related): Fed's Lacker Raises Concerns About Deal to Rescue Bear
by Greg Ip
The Wall Street Journal Jun. 5 2008
David Einhorn’s takedown of Lehman’s highly questionable accounting. Note particularly an increasingly common phenomenon: unexplained material discrepancies between the results announcement and its 10Q filing.
Accounting ingenuity
by David Einhorn
Ira W. Sohn Investment Research Conference
May 21 2008
All that stuff about Jérôme Kerviel acting alone in setting up that €5 billion discrepancy in Société Générale’s trading account? As they say in France, taureau-merde. The formal cover-up investigation suggests that his trading assistant was in on the act, and his alleged supervisors were either out to déjeuner or en vacation.
Report of the Special Committee (8 pages)
Summary of PwC diagnostic review (37 pages)
SG General Inspection Dept. Summary Report (71 pages)
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