Even his friends in National Intel can't save him now... OWS Facebook's rage about 1% Greed

SAN FRANCISCO (MarketWatch) — Facebook Inc. FB +1.42% Chief Executive Mark Zuckerberg has sold 30.2 million shares and director Peter Thiel has sold 16.8 million shares of the social-networking company, according to securities filings published late Tuesday. The sales confirm plans detailed in a prospectus before Friday’s $16 billion IPO. Zuckerberg sold 30.2 million shares at a price of $37.58 for gross proceeds of $1.13 billion; Thiel sold 16.8 million shares for gross proceeds of $633 million. Facebook insiders had told prospective shareholders of their plans in an S-1 filing last week. Facebook FB +1.42% shares were down 0.8% after hours at $30.74.

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A bank run is now happening within the eurozone. So far it has been relatively slow and prolonged, but it is a run nonetheless. And last week, it showed signs of accelerating sharply, in a way which demands an urgent response from policy-makers.

The fear of bank runs is deeply ingrained in all economists who know anything about the genesis of the Great Depression in the United States in the early 1930s. Then, the failure of the Bank of United States in December 1930 led to multiple bank runs across the country. Bank failures in the following two years wiped out personal savings and greatly exacerbated the collapse of demand in the economy.

The classic account of the crisis, by Milton Friedman and Anna Schwartz, concluded that the collapse was largely the fault of the Federal Reserve, which failed to provide enough liquidity to keep the banks functioning and thus end the panic. After the crash, the establishment of the Federal Deposit Insurance Corporation was intended to ensure that deposit holders never again had to live in fear that their savings would be in jeopardy. What are the lessons for the eurozone?

The risk of bank runs is an inevitable feature of any banking system which takes short term deposits from lenders, and then makes longer term loans to borrowers. This “maturity transformation” is arguably the key function of a bank, but it brings with it the risk that depositors will ask for their money in large numbers at a time when the bank does not have the liquid resources to meet these demands.

This can cause a rational stampede to withdraw money, since depositors who wait until late in the day can lose all of their money. The pioneering work of Diamond and Dybvig in 1983 showed that banking systems are characterised by multiple equilibria. They demonstrated that it is possible for the system to shift without much warning from a good, stable equilibrium to a situation in which it is rational for deposit holders to demand their money immediately.

In some ways, the withdrawal of deposits from banks in the periphery of the eurozone is simply a slow motion version of a rational bank run in the Diamond/Dybvig tradition. For example, deposits in Greek banks have fallen by about a third since the beginning of 2010. Deposits in Irish and more recently Spanish banks have also been falling. Depositors have been shifting their money to “safer” banking systems, notably those in Germany. The extent of these declines and other financing difficulties for the banks is illustrated by the rise of Target 2 imbalances contained within the ECB’s balance sheet, which reflect the mechanism through which these cross-border flows have been financed:

The standard central bank response to this problem is to provide enough liquidity to solvent banks to ensure that deposit holders are always able to withdraw their money, in which case the panic is eventually supposed to subside. The ECB has done this to the full extent required; in this respect it is not possible to criticise the ECB for failing to fulfill the role of lender of last resort to the entire system. Yet the continuing drain on deposits has not been halted.

The reason for this, of course, is the fact that the eurozone is not a single nation state, even though it does have a single central bank. This has two consequences. First, the underlying fear of depositors in the periphery is not simply, or even mainly, one of bank failure. Instead, they probably fear the devaluation of their deposits relative to those in core economies if the euro should break up.

Therefore, the run is being caused by concerns about exchange rate risk, not necessarily by the fear of bank failure as such. This makes it much more complicated to deal with, since it is very difficult to offer guarantees against future exchange rate losses to today’s depositors. Germany would not want to stand behind such guarantees to Greek and Spanish citizens in the event of a euro break-up.

Second, the bank run is greatly increasing the scale of potential transfers between nation states which until recently have been disguised within the ECB balance sheet. As deposits are withdrawn from Greek banks, the ECB replaces these deposits with liquidity operations. If these are standard repo operations, such as those undertaken in the LTROs in December and February, then the ECB is directly assuming risks which the Greek private deposit holder is no longer willing to hold. If the liquidity is injected via Emergency Lending Assistance, then the Bank of Greece is theoretically assuming the risk, rather than the ECB as a whole. But in the event of a euro break-up, these losses would ultimately fall on the ECB itself.

The problem is that this potentially exposes the ECB to much bigger losses than anything which has been contemplated so far by the core economies.

Up to now, the ECB has been willing to inject liquidity to cover the financing needs of the periphery banks as the inter-bank market has dried up. If instead, they have to contemplate providing semi-permanent funds to cover large further withdrawals of bank deposits, the size and timescale of the injection becomes extraordinarily large.

As the table (from David Mackie of J.P. Morgan) shows, the outstanding bank deposits of the periphery are many times larger than the current exposures of the ECB and core governments to the periphery. It seems inconceivable that core countries like Germany will be willing to expose themselves to these risks if the deposit flight continues.

Mario Monti apparently took a plan to the G8 summit to offer jointly-funded guarantees on bank deposits to apply across the entire eurozone. This would certainly help, but whether it would be sufficient to eliminate fears of exchange rate losses if the euro were to disintegrate is another matter. To fix that problem, belief in the integrity of the euro as a single currency needs to be restored. The bank run could bring matters to a head.

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The stock market rallied Monday, but Facebook’s shares sank in the first day of trading without the full support of the company’s underwriters.

Facebook’s market debut on Friday was beset by problems, so much so that Nasdaq said on Monday it was changing its IPO procedures. That may comfort companies considering a listing but does little for Facebook, whose lead underwriter Morgan Stanley had to step in and defend the $38 offering price on the open market.

Without that same level of defense, its shares fell 11 percent Monday from Friday’s intra-day high of $45 a share, closing just below $34. (Track Facebook’s stock price here.)

“At the moment it’s not living up to the hype,” Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago said, adding that some people may have decided to hang back and buy the stock on the declines.

“Look at the valuation on it. It might have said ‘buy’ to a few people, but boy it was awfully rich,” he said.

The losses wiped some $19 billion off of the company’s market capitalization — not far from what Chief Executive Mark Zuckerberg was worth personally when the stock debuted.

Related: After Facebook IPO debacle, finger-pointing begins

Volume was again massive, with more than 96 million shares trading hands in the morning session alone, making it by far the most active stock on the U.S. market. Nearly 581 million shares were traded on Friday.

“One of the things that we are seeing in Facebook is a lot of emotional trading, in that over the weekend much of the media coverage was negative, and that could be weighing on investors’ decisions to get out of the stock,” said JJ Kinahan, TD Ameritrade’s chief derivatives strategist.

The drop was so steep that circuit breakers kicked in a few minutes after the open to restrict short sales in the stock, according to a notice from Nasdaq.

Shares in other one-time Internet darlings fell in lockstep with Facebook on Monday, with Yelp, LinkedIn and Zynga all lower.

As Facebook fell, there was a long list of questions — ranging from whether the underwriters priced the shares too high to how well prepared the Nasdaq was to handle the biggest Internet IPO ever — and few immediate answers.

“It was just a poorly done deal and it just so happens to be the biggest deal ever for Nasdaq and they pooched it, that’s the bottom line here,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

The broader market fared better. The Dow Jones industrial average close the day up 135 points.

Nasdaq said Monday morning the changes it was making would prevent a repeat of what happened Friday, when glitches prevented some traders from knowing for hours whether their trades had been completed.

Related: Trading expert on Facebook IPO debacle

The exchange also said it would implement procedures to accommodate orders that were not properly executed last week, which could ultimately lead to compensation for some investors.

“It doesn’t instill confidence for clients. Talk about trying to convince them it isn’t a casino,” one Midwestern financial adviser told Reuters on Monday.

Separately, a source said Morgan Stanley’s brokerage arm still had a “large number” of share orders from Friday that were not confirmed, which it was working to resolve.

A Facebook spokeswoman declined to comment on the share price issue.

But analysts said that after the initial frenzy, investors were quickly becoming cautious about the stock.

“Investors are increasingly aware of the risk embedded in the stock price. There are real concerns about growth and advertisers’ frequent lack of certainty how best to use Facebook, along with rising costs and ongoing acquisition risk,” said Brian Wieser at Pivotal Research Group, who has a $30 target on the stock.

“At $38, the stock is priced for perfection in a manner that implied that risks were negligible.”

In earnings news, Lowe’s Cos Inc, the world’s second-largest home improvement chain, cut its fiscal-year earnings outlook and said demand slowed toward the end of the traditionally strong first quarter.

Yahoo shares rose after news that Chinese Internet entrepreneur Jack Ma is buying back up to half of a 40 percent stake in his Alibaba Group from Yahoo for $7.1 billion in a deal that moves the Chinese e-commerce leader closer to a public listing.

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Saverin, a native of Brazil, owns an estimated 4 percent of the wildly popular social network Facebook and stands to net close to $4 billion when the company goes public tomorrow, May 18.  By renouncing his U.S. citizenship, Saverin will avoid paying close to $67 million in taxes.

Calling Saverin’s decision an “outrage,” Sens. Schumer and Casey outlined a plan that would “re-impose taxes on expatriates like Saverin even after they flee the United States and take up residence in a foreign country” and “impose a mandatory 30 percent tax on the capital gains of anybody who renounces their U.S. citizenship.”

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What missiles?

Bloomberg

The House panel that controls military expenditures proposed a net increase of $874 million for weapons over the Pentagon’s budget plans for the year starting Oct. 1.

The largest amounts that the House Appropriations Defense subcommittee added in producing a $102.4 billion procurement request were $562.4 million to buy 11 additional Boeing Co. (BA) F/A-18E/F Super Hornet fighter jets and $447 million to buy seven more Lockheed Martin Corp. (LMT) C-130J transport planes, according to the defense panel’s report obtained today.

The subcommittee also added $300 million for procurement of Pac-3 Patriot missile interceptors from Lockheed Martin and Raytheon Co. (RTN) and $199 million to buy 10 more UH-60 Black Hawk helicopters made by United Technologies Corp. than the Army requested. The panel didn’t specify major cuts it proposed except a $33.7 million reduction for Boeing’s P-8A surveillance aircraft.

The full House Appropriations Committee is scheduled to act May 17 on the recommendations of its defense panel, which added the money for weapons as part of a $3.1 billion total increase from about $513 billion that the Pentagon proposed for its spending that comes under the defense subcommittee’s jurisdiction.

The full House this week will consider parallel legislation that authorizes defense spending. That bill calls for $4 billion more than the Pentagon’s request of $550 billion, which includes military construction and the Energy Department’s defense program.

Veto Threatened

The White House budget office today issued a veto threat over the defense authorization measure. If its “cumulative effects” would impede the administration’s ability to execute its new defense strategy and “to properly direct scarce resources,” President Barack Obama’s advisers would recommend a veto, according to a statement by the Office of Management and Budget.

The appropriations subcommittee in its proposal also added $576.3 million to the Pentagon’s $69.4 billion research request.

The panel boosted funding for General Dynamics Corp. (GD)’s Abrams battle tanks by $181 million, enough to help convert an additional 33 tanks to the latest M1A2 model. The Army wants to suspend that work at a Lima, Ohio-based tank plant from 2013 to 2015.

Drones, Israel Defense

General Atomics also would get an increase for its MQ-9 Reaper drone. The lawmakers proposed an increase of $155 million and 12 drones above the Pentagon’s request.

BAE Systems Plc (BA/) would see an increase of $140 million from the Pentagon’s request for its Bradley Infantry Fighting Vehicle.

The request for $2.6 billion in research for the F-35 fighter jet from Bethesda, Maryland-based Lockheed, the Pentagon’s largest program, was nicked by $16.8 million.

The panel recommended adding $848.9 million for Israel’s missile defense, including $680 million for the Iron Dome system and $111.4 million for a system called David’s Sling.

Iron Dome, built by Israel’s Rafael Advanced Defense Systems Ltd., went into operation a year ago and has proved effective at intercepting short-range rockets, according to Israeli and U.S. officials. The $680 million also was backed last week by the House panel that authorizes defense spending.

Israeli Defense Minister Ehud Barak is meeting with Defense Secretary Leon Panetta at the Pentagon on May 17, and the session is intended to include an agreement on more U.S. funding for Iron Dome, according to an Israeli ministry official who spoke on condition of anonymity because he wasn’t authorized to comment in advance.

Rescinded Funds

The appropriations panel also detailed $1 billion in procurement and research funds approved for this fiscal year that it seeks to rescind. The largest amounts are $115 million for the Air Force’s Light Attack Armed Reconnaissance program and $105 million for the Pentagon’s Joint Air-to-Ground Missile.

The panel proposed cutting $66 million from a $99.6 million development request for Northrop Grumman Corp. (NOC)’s MQ-8 Firescout drone that was originally intended for the Navy’s Littoral Combat Ship.

Delays on the combat ship have resulted in the drones being used for other roles and missions, which in turn disrupted the Firescout’s testing and development schedule, the panel said.

The panel urged the Navy to place the Firescout on “probation.” Firescout issues have included a crash and a drone that lost communications with its control station while conducting operations, the panel said.

Great metaphor for the global economy... Limp and impotent

NBC

The NBC Investigative Unit has raised questions about two grants totaling nearly $1.5 million dollars distributed to the University of California San Francisco. The money was part of the federal stimulus program and went to studies into the erectile dysfunction of overweight middle aged men and the accurate reporting of someone’s sexual history.

This is part of our ongoing series of investigations by the NBC Bay Area Investigative Unit into who got federal stimulus dollars, and why some projects did not break ground more than two years after receiving the grant.

The Investigative Unit looked closely at the federal government’s decision to spend nearly $1.5 million dollars of taxpayer money, money that came here to California. Grant number 1R01HD056950-01A2 was among the thousands of grants funded, receiving $1.2 million dollars. This grant studied how to improve the accuracy of how people responded to questions about their sexual history.

“If you honestly report on your sexual activity and number of partners?” Scott Amey with asked with a sigh. “That’s a good one.”

Amey is the general council for  POGO, the Project on Government Oversight, a Washington D.C. nonpartisan non-profit government watchdog group. During our interview with an NBC crew he tried to explain why the government used that many tax dollars to improve self reports about high risk sexual behavior.

“I don’t think most tax payers would think that would be a justified spending of stimulus money to conduct a sex study over fixing bridges and roads that are crumbling every day,” Amey added.

NBC Bay Area talked to the University of California San Francisco, the institution that received the grant. “Does it make you wonder a little bit, stimulus money for a study like this?” Kovaleski asked Jeff Sheehy, who works at the UCSF Aids Research Center. “No it doesn’t,” he answered. “Because to my mind we save money if we get better health outcomes.”

According to the grant, a good portion of the study will “Improve the accuracy of responses to questions,” specifically questions about a person’s sexual behavior. “Playing devil’s advocate,” Kovaleski said to Sheehy, “Do taxpayers need to spend $1.2 million dollars to figure this out?”"The judgment wasn’t one that I was asked,” Sheehy replied.

The NBC Bay Area Investigative Unit discovered that for $1.2 million dollars, taxpayers funded a study that included 200 videotaped interviews at $6000 per interview. Kovaleski asked Sheehy to justify the spending. “I think the average person is going to look at $1.2 million dollars to interview 200 people and say Wow!” Sheehy defended the study. “I understand people could look at it and have issues but this is research,” he said.

Kovaleski then asked about jobs. “How many jobs did this $1.26 million dollars create?” “Well I can’t really say,” Sheehy said. “There were eleven researchers hired on the job, two consultants. Well I can’t say. This has not been evaluated for job creation.”

The number Sheehy quoted during an interview with NBC Bay Area did not match information on recovery.gov, the government’s website for stimulus funds. According to the site, the grant produced 0.85 jobs. “It does make you scratch your head and wonder,” Amey said, “Wait a second taxpayer dollars went to a sex study that barely funded less than one person.”

Amey was also left questioning another UCSF grant. When asked by an NBC reporter about a study into erectile dysfunction involving overweight middle aged men he replied, “Oh boy.”

The grant totaled more than a quarter million dollars. Although UCSF was willing to discuss our questions about the sexual history grant, the University declined to provide an expert to talk with the NBC Investigative Unit about the erectile dysfunction grant. In a written statement provided they said in part, “Obesity related health issues currently cost $147 Billion per year in direct medical costs in the United States….. Health providers therefore continue to search for incentives to encourage people to live a healthier lifestyle, to benefit both indviduals and society…. Preliminary analysis indicates that is is feasible to enroll men in this type of research, they successfully lose the expected weight over a 12-week period, and they see an improvement in ED symptoms.” You can read the entire statement by clicking here.

Click here to see the high risk sexual behavior grant

Click here to see the erectile dysfunction grant

If you have any other examples of questionable stimulus spending, we want to know. Call us at 1-888-996-TIPS (8477) or email theunit@nbcbayarea.com

Businessman Frank Vandersloot, the CEO of Melaleuca, has been targeted by the Obama campaign after donating money to Mitt Romney’s presidential campaign. “Three weeks ago, an Obama campaign website, ‘Keeping GOP Honest,’ took the extraordinary step of publicly naming and assailing eight private citizens backing Mr. Romney,” Kim Strassel of the Wall Street Journal reported. “Titled ‘Behind the curtain: a brief history of Romney’s donors,’ the post accused the eight of being ‘wealthy individuals with less-than-reputable records.’ Mr. VanderSloot was one of the eight, smeared particularly as being ‘litigious, combative and a bitter foe of the gay rights movement.’”

The attacks are working. Vandersloot revealed in an interview on Fox News that his business practice is being hurt by the attacks from the Obama team.

“Those people that I know well weren’t affected by this [attack],” said Vandersloot. “But for people who didn’t know me, who are members of our business or customers, and they were reading this, then we got a barrage of phone calls of people cancelling their customer memberships with us.”

“Really?,” the Fox News host asked. “How many did that?”

“A couple hundred that we can track,” Vandersloot replied.

Again, the host asked, “Really? Do you have any grounds to sue?”

“I suppose we do,” Vandersloot said. The businessman says he’s been accused of being anti-gay, an accusation he says that couldn’t be further from the truth.

Watch the interview here:

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London, United Kingdom – Fracking: environmental and human destruction at its very worst. Groundwater contamination, billions of gallons of fresh water squandered, small earthquakes, toxic air emissions, reports of radiation, and not even tap water going up in flames are enough to halt the decimation of our precious countryside, in an attempt to extract copious volumes of natural gas from the unearthed, sedimentary shale rocks below.

Desperate destroyers, shielded within a self-regulating industry, think of nothing but profit as they hydraulically fracture rocks with a lethal cocktail of chemicals, sand and billions and billions of gallons of fresh water. Fracking is the latest devastating testament to how destructive capitalism has suffocated and engulfed our precious planet.

In May 2010, after entering office, Prime Minister David Cameron stood up and declared: “I want this to be the greenest government ever.” That spurious statement has not been honoured. This British government has chosen to do nothing except ignore all the toxic consequences associated with the dirtiest and most invasive extraction method of natural gas.

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Global Corporate-Financier Mafia Grows New Tentacle: Global Tax Collectors.
by Tony Cartalucci 

May 10, 2012 – The Organisation for Economic Co-operation and Development (OECD), a 50 year old network constituting what is often known as the “West,” has been the premier promoter of expanding corporate-financier hegemony across the planet. Done under the guise of “progressive” initiatives, claiming to “promote policies that will improve the economic and social well-being of people around the world,” it is demonstratively run by the most explicit examples of institutions and individuals impeding such lofty goals.

Not least amongst them is convicted criminal George Soros and his “Open Society Institute.” While surely the organization’s rank and file includes a majority of well-intentioned “liberal-progressives,” pursuing and promoting agendas seemingly benign, the reality is that the organization, in tandem with the US State Department and the British Foreign Ministry, is laying the groundwork for a homogeneous global network of administrators for what is literally a neo-imperial empire.

With characters like George Soros and his self-serving institution behind the OECD, Soros having been convicted and fined for insider trading in 2002, a conviction that was more recently upheld by the European Court of Human Rights,” it would be laughable for such an enterprise to pose as international arbiters fighting financial fraud. Yet that is exactly what the OECD portends to do – and most recently announced the creation of “Tax Inspectors Without Borders.” Its name invoking the equally well-intentioned, but ultimately fraudulent “Reporters Without Borders,” another Soros-US State Department building block for what is to be a “global empire,” it aims to “to help developing countries bolster their domestic revenues by making their tax systems fairer and more effective.”

In reality it aims at imposing an international standard upon tax collection, and as each nation is financially destroyed by international bankers, IMF loansharking, and foreign-funded destabilization, the austerity measures demanded to be paid in “bailouts” and for “reconstruction” will be managed and coached by the OECD’s new tentacle to ensure every unit of currency ends up in globalist coffers.

Image: OCED nations – also looking suspiciously like Wall Street and London’s sphere of influence and NATO’s membership.

Just as corporate-financier funded “human rights” organizations attempt to create a global homogeneous “civil society” to overwrite the indigenous social institutions of sovereign nation-states, the OECD’s “Tax Inspectors Without Borders” will attempt to create a global homogeneous tax collection system to replace that of sovereign nation-states.

As covered in February 2012′s “Soros Big-Busienss Accountability Project Funded by Big-Business,” there is nothing “international” or “plural” about the coming global government. In reality it is driven by a handful of corporate-financier interests working to consolidate their power over not only finance and industry, but over governments and societies worldwide. This is the natural progression of what banking magnates like JP Morgan, the Rothschilds, Goldman, and the Rockefellers were in the midst of when US Marine Corps General Smedley Butler wrote “War is a Racket,” and is a progression that will continue as long as average people continue feeding on a monthly basis the summation of their work, energy, attention, and income into the corporations and institutions of this growing monopoly.

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