From Denny: OK, everyone raise their hand who believes the latest Wall Street story about why the American stock market took a dive last week. Yes, I thought so. All of you know they are still lying. Oh, this story is PART of the truth but not all of it and we ALL know it!
What the public is furious about is how Wall Street continues to play the financial shell game with us, along with lying, and no one stops them. The politicians are in the back pockets of Wall Street because of enormous campaign funds drug dripped to them ever so carefully over decades to decide who gets in and who stays out of office.
One smart thing to come out of the Obama White House today - and a long time coming - is the decision to divide in two the Minerals Management Service under the Department of the Interior. After the BP oil spill flashed a glaring light on how cozy parts of our government are with the oil industry it was the smart political move.
Minerals Management Service will now have two agencies: one for inspecting oil rigs, actually enforcing safety regulations like they are supposed to do and shining the light of investigation on oil companies when they need it (which will probably be a continuing effort).
The second agency will oversee the leases for oil drilling as well as collecting those billions of dollars in oil royalties. (Which Louisiana never saw for decades - until recently when the government promised them to the state. Of course, we have yet to see those royalties or we would not be having a state budget shortfall to the tune of $1 billion.)
CBS did a long series of interviews with Secretary of State Hillary Clinton about her global mission. Included are links to all the video clips.
What I find to be an alarming development that could cascade and cause our fragile economy to collapse or develop a severe limp is this new trend of homeowners walking away from devalued homes while they can still afford to pay. It's called "strategic default" and already over one million homeowners have done this. Currently, there are over 11 million homeowners across the nation who are struggling to pay their mortgages.
There is no way the banks can absorb this many toxic assets. Of course, the big banks dug themselves into this hole and refuse to work with homeowners. They haven't even dipped into the huge billions Obama gave them to help restructure mortgage debt.
And you think the BP oil spill is a mess - wait until this real estate walk away spreads past Arizona and California. I simply do not understand why banks are so incredibly stupid. It just goes to the old Louisiana saying, "Greed will bring you to your knees." There is no way the American taxpayers will ever again OK a bailout for any big banks or Wall Street. These banks will fail.
And, late this afternoon in my Central Time Zone, we heard that Britain finally hammered out a deal to make David Cameron Prime Minister. It sure looks like he has some fine ideas for real change to pull his odious party away from the Thatcher model into the new century and actually care about people. Hopefully, he will succeed, if he is true to his agenda and promises.
WSJ: Hedge Fund's Bet May Have Triggered Market Dive (CBS)
Last Thursday's incredible market plunge may not have been set off by a typographical error, as originally speculated, but rather by a hedge fund's big bet that stocks would decline, according to a Wall Street Journal report ($) Tuesday.
The furious sell-off, which sent the Dow Jones industrials down nearly 1,000 points on the day in a matter of minutes, took place shortly after hedge fund Universa Investments LP executed a $7.5 million trade for 50,000 options contracts, according to the report. Traders on the other side of the transaction, including Barclays Capital, engaged in their own selling in order to offset the risk, creating a tidal wave of selling that clogged up exchanges.
Ordinarily, Universa's trade, which would have paid off around $4 billion if the S&P 500 falls to 800 by June (it was 1145 at the time of the transaction), might have had a temporary impact on stock prices, but not cause a dramatic ripple effect. But among markets already jittery because of Europe's debt woes, the transaction may have triggered more widespread selling, according to the report.
The episode points out a "structural flaw" in the markets, Gus Sauter, chief investment officer at Vanguard Group, told the Journal.
As the report notes, physical exchanges like the New York Stock Exchange are becoming less important as computer-driven trading operations at firms around the country drive much of the market. That leads to greater potential for disorder and makes controlling markets more difficult.
Official Seeks Changes to Oil Drilling Oversight (CBS)
Interior Secretary Ken Salazar Wants to Split Agency that Oversees Offshore Drilling
The Obama administration is proposing to split up a U.S. Interior Department agency that oversees offshore drilling, as part of its response to the Gulf Coast oil spill, The Associated Press has learned.
An administration official who asked not to be identified because the plan is not yet public said Interior Secretary Ken Salazar will call for splitting the Minerals Management Service in two. One agency would be charged with inspecting oil rigs, investigating oil companies and enforcing safety regulations, while the other would oversee leases for drilling and collection of billions of dollars in royalties.
Currently, the Minerals Management Service, an arm of the Interior Department, is responsible for collecting more than $10 billion a year from oil and gas drilling and with enforcing laws and regulations that apply to drilling operations.
Some critics have said the two roles are in conflict and are one reason the agency has long been accused of being too cozy with the oil and natural gas industry.
An administration official said Salazar has the authority to split up the agency but is likely to propose other changes Tuesday that would require congressional approval.
An internal investigation in 2008 described a "culture of substance abuse and promiscuity" by workers at the minerals agency. The investigation by Interior's inspector general found workers at the MMS royalty collection office in Denver partied, had sex with and used drugs with energy company representatives. Workers also accepted gifts, ski trips and golf outings, the report by Inspector General Earl E. Devaney said.
Devaney decried "a culture of ethical failure" and an agency rife with conflicts of interest.
More than half a dozen workers out of around 50 at the Denver office were disciplined - and several were fired - because of the scandal.
Salazar, who promised aggressive reform when he took over the Interior Department early last year, believes the tragedy aboard the Deepwater Horizon oil rig - and the resulting massive oil spill has made reform even more urgent, the administration official said.
The Interior Department will move to establish an independent energy inspection agency within the Minerals Management Service "so that the American people know that they have a strong and independent organization holding energy companies accountable and in compliance with the law of the land," the official said...
Secretary of State Clinton's Global Mission (CBS)
She Talks to "60 Minutes" About America's Foreign Policy Challenges, the War on Terror, and Being the Country's Top Diplomat
After the car bomb was found in Times Square, we wanted to ask the secretary of state about the administration's efforts against terrorism in Pakistan and Afghanistan. "60 Minutes" correspondent Scott Pelley spoke with Secretary Clinton at the State Department on Friday.
It was the last in a series of interviews that we've done with her over the last six months. During that time, we've been traveling with Mrs. Clinton to see how this surprising choice for secretary of state is engaging the world. We didn't expect such a far flung story would begin with questions about events in the heart of Manhattan.
