derivatives

It isn;t often that Matt Taibbi of Rolling Stone and I are on the same page, but here we are.

Taibbi excoriates Goldman Sachs for its role in the internet, oil and housing bubbles, and then identifies their next great scheme

And instead of credit derivatives or oil futures or mortgage-backed CDOs, the new game in town, the next bubble, is in carbon credits — a booming trillion- dollar market that barely even exists yet, but will if the Democratic Party that it gave $4,452,585 to in the last election manages to push into existence a groundbreaking new commodities bubble, disguised as an "environmental plan," called cap-and-trade. The new carbon-credit market is a virtual repeat of the commodities-market casino that's been kind to Goldman, except it has one delicious new wrinkle: If the plan goes forward as expected, the rise in prices will be government-mandated. Goldman won't even have to rig the game. It will be rigged in advance.

Message to Matt. It's not just Goldman Sachs that's in on the fix. It's also the Chicago Mercantile Exchange.  And lookie who is on the receiving end of the fix. Remarkable.

We are about to see a political windfall occur that would turn the head of Tammany Hall's George Washington Plunkitt.

Consider this little feature of the "cap and trade" bill..

 .. the Chicago Mercantile Exchange's mouth is watering at the prospect of a huge new derivatives market.

Yep, the big financial winner from Waxman-Markey is not likely to be solar energy entrepeneurs; it is likely to be derivatives traders gaming the emissions trading markets.

The Chicago Mercantile Exchange is ready to set up its own "Gas House Gang" CME's Chairman, Terrence Duffy, recently told a House committee his firm is all ready to go to implement the process. 

 This is going to be massive if implemented. I mean, like trillions of dollars massive. And this means mind- boggling commissions and bonuses for traders, and huge profits for the CME itself. Remember how much money Enron used to make doing this sort of stuff? 

Now,hmmm, who's on the Board of Directors of the CME? 

Jackie Clegg Dodd, Chris Dodd's wife. (there's no conflict of interest , here , as per hubby)..maybe he didn't read this.

And she is well compensated  for a post where she is thinly qualified.

So if Cap and Trade passes Jackie Clegg Dodd's corporation stands to make a windfall?

(they also stand to make a windfall from OTC derivative regulation underway)

And presumably the board members will share in the added revenue.

And it gets better. Guess who's drafting the yet unfinished parts of the Waxman-Markey bill governing derivative regulations?

Chris Dodd's old buddy Barney Frank

So how this is going to work is that ordinary electric customers will see their rates "skyrocket"; some well connected businesses have already gotten exemptions; and the whole deal will be manipulated by commodity speculators.  Who made sure to put the spouse of the chairman of the Senate Banking Committee on their Board of Directors.

It seems like what "Hope and Change" really means is that the political insiders can add another decimal point to the "honest graft" they were accustomed to receiving. Meanwhile "Connecticut's middle class" will get hosed.  (They'll need to use credit cards to pay their CL&P bill, Chris)

Really, this is going to make the Countrywide mortgage and the Irish cottage look like chump change as far as the potential windfall to the Dodd family.   And  no one seems to connect the dots. Amazing.

I didn't catch this, but apparently Senator Chris Dodd was on Fox News Sunday and defended the aptitude of his wife, Jackie Clegg Dodd, to serve on numerous corporate boards. Even claimed raising the issue was "offensive"

Boards which represent about $500,000 in annual income to the Dodd household.

Well, if Mrs. Dodd is so brilliant, surely these firms are all very profitable.

Not.

A review of the five active boards  on the Muckety list which Mrs. Dodd serves on indicates only one such corporation--the CME Group---is a profitable corporation. (whether the world's largest financial future exchange should have the spouse of the Banking Committee Chairman on their board in the first place deserves its own post)

The others are --much like the banking system under hubby's oversight--in various forms of financial duress.

Blockbuster---which has had Mrs. Dodd on its audit committee for many years---denies it is about to file for bankruptcy. . It claims to have made money last quarter (despite declining revenue) after a long stretch of losses going back years.

Now for the various health care firms Mrs. Dodd helps to manage. The blatant conflict herein has not gone unnoticed by the press, but let's look at performance. Is Mrs. Dodd capable of running a successful business?

Maybe not.

Brookdale Senior Living claims to be the "largest owner and operator of senior living communities throughout the United States",  How are they doing at that?

Brookdale lost $13.6 million, or 13 cents per share, compared with a loss of $55.1 million, or 54 cents per share, a year earlier. The company mostly benefited from a much smaller change in the fair value of derivatives and amortization.

See as follows Brookdale's long run of red ink.

Now we catch Javelin Pharmaceuticals

Guess what. Javelin is losing money

But the real knee slapper is Cardiome Pharma Corp.  

 We recorded a net loss of $60.5 million ($0.95 per common share) for the year ended December 31, 2008 compared to a net loss of $85.5 million ($1.36 per common share) for the year ended December 31, 2007

and the red ink isn't ending

We recorded a net loss of $12.0 million ($0.19 per common share) for the three months ended March 31, 2009 ("Q1-2009"), compared to a net loss of $22.2 million ($0.35 per common share) for the three months ended March 31, 2008 ("Q1-2008")

OK, it's a medical start-up and maybe the place is about to turn the corner, earn money for their investors and employ lots of highly skilled people.

Only one problem. The firm will be doing all this wonderful stuff in Vancouver, Canada.

Is competing with CT's pharma industries how you plan to "defend Connecticut's middle class", Chris?  

What makes this all the more nauseating is that in 1992 Chris Dodd ran saturation TV attack ads against his opponent for buying a textile firm in Canada; implying that was bad for the U.S. worker.

Is it now OK when your wife does it, Chris?

Let's look at this again. Mrs. Dodd is a great businesswomen who just happens to be on boards of five firms. Four of which are money pits.  Why then, is she such a brilliant businesswoman? She doesn't keep firms from losing money, now does she? 

Of course, if I was running a money losing firm in the health care field, the wife of a powerful U.S. Senator is exactly the right person for my company's Board of Directors at this critical time.   

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Ed Note: I learned Mrs. Dodd is supposedly on the board of Pear Tree Pharmaceuticals. They appear to be a privately held spinoff from Javelin, and therefore, earnings information is not quite as transparent as the publicly traded firms previously mentioned..