Dominique Strauss-Kahn, the former head of the International Monetary Fund, was released from police custody after almost two days of questioning as part of an investigation into a French prostitution ring.

Strauss-Kahn, 62, turned himself in yesterday morning to answer questions and spent the night in a jail cell in Lille, in northern France. He may be called back for further questioning in March, a prosecution spokeswoman said, declining to be identified citing office policy.

“There is nothing you can read into his being released” to tell where the case may go, said Christopher Mesnooh, a Paris-based lawyer not involved in the case.

Strauss-Kahn could be named as a material witness or charged, the spokeswoman said.

He gave up his post as managing director of the IMF last year after being arrested in New York for sexually assaulting a hotel maid. Prosecutors dropped the case because of concerns about the woman’s credibility and Strauss-Kahn returned to France, where he faced separate accusations of attempted rape, which were also dropped.

Strauss-Kahn “answered all questions,” Frederique Baulieu, his lawyer, said to reporters broadcasting outside the police station. “It is now in the hands of the judges.”

Eiffage Complaint

French builder Eiffage SA filed an embezzlement complaint after an internal probe found an employee spent as much as 50,000 euros (US$66,000) to pay for women to travel as far as Washington to have sex with Strauss-Kahn.

Investigators are trying to determine whether Strauss-Kahn knew corporate money was used to pay the women and whether he played an active role in booking prostitutes for sex parties he allegedly attended.

Prostitution and paying for sex are legal in France, while procuring prostitutes for someone else isn’t.

Strauss-Kahn has denied wrongdoing in relation to the investigation and said in a Nov. 11 statement from his lawyers that he wanted to be questioned, “to put an end to the dangerous and spiteful insinuations” in the media.

The Lille investigation has led to charges against eight people, including local hotel officials and a local police chief.

“A lot of other people associated with this affair have been indicted,” Mesnooh said. “Their links were a little more direct perhaps than the links of Mr. Strauss-Kahn with the prostitution side and the abuse of corporate assets side.”

Bloomberg News

Strauss-Kahn freed following two days of questioning in prostitution inquiry

By Alan Wheatley, Global Economics Correspondent

LONDON — Away from the markets’ fixation with the debts of Greece and other governments, concern is growing at the painfully slow progress Europe is making in tackling a much bigger mountain of corporate and household debt.

With austerity pointing to weak growth if not outright recession, the risk is that the burden of servicing the debt can only increase, causing a rise in bad loans. The spotlight then would fall on the capacity of banks to take losses and whether they might have to turn to their governments for help.

And overindebtedness is not confined to the periphery of the bloc.

Denmark, Sweden and the Netherlands all have private-sector debt that far exceeds the safety threshold of 160% of GDP set by the European Commission as part of a new exercise to detect and correct risky macroeconomic imbalances.

In the case of the Netherlands, the main culprit is home loans, which have risen more than 7% a year since 2000 as borrowers have taken advantage of the tax deductibility of mortgage interest, according to Dutch central bank governor Klaas Knot.

“In my view the high stock of mortgage debt is among today’s biggest vulnerabilities of the Dutch economy,” Knot, a member of the European Central Bank’s Governing Council, said in a recent speech in London.

Up to a point, debt is not only good for growth, it is vital. But it’s possible to have too much of a good thing.

The Commission, the EU’s executive body, said no fewer than 15 of the EU’s 27 members exceeded its 160% safety cutoff, led by Ireland on 341%.

A recent Bank for International Settlements working paper concluded that when public debt rises to 95% of GDP from 85%, trend economic growth can be reduced by more than one-tenth of a percentage point.

For corporate debt the pain threshold is closer to 90% and the economic hit is slighter, while for household debt the BIS’s best guess is that the inflection point is around 85% of GDP.

“A clear implication of these results is that the debt problems facing advanced economies are even worse than we thought,” said the BIS authors, led by chief economist Stephen Cecchetti.

PAIN IN SPAIN

What should be done?

“Current efforts focus on raising the cost of credit and making funding less readily available to would-be borrowers. Maybe we should go further, reducing both direct government subsidies and the preferential treatment debt receives. In the end, the only way out is to increase saving,” the BIS paper said.

Although private sector debt burdens are worryingly high in a host of European countries, the markets’ focus is understandably on those countries that have either been bailed out by the EU and the International Monetary Fund or are struggling to sell their bonds at non-punitive rates.

Take Spain. Its public sector debt is still only 61% of GDP, having doubled since the onset of the crisis, but it is drowning in private sector debt equivalent to 227% of GDP.

Spanish corporations hold twice as much debt relative to national output as do U.S. companies, and six times as much as German firms, according to the McKinsey Global Institute.

“Debt reduction in the corporate sector may weigh on growth in the years to come,” MGI said in a report.

Looking at the composition of Spain’s debt, Jamie Dannhauser, an economist with Lombard Street Research, a London consultancy, said it was irrational to describe Spain as facing a sovereign debt crisis brought on by fiscal profligacy.

Rather, investors are demanding high bond yields because they are worried about the impact that recessionary policies will have on Spanish corporations and, with a lag, on the country’s banks.

“Growth is the only way to make the private debt stock sustainable, and the market quite reasonably judges that all of the policies being forced on Spain will depress output in the short term,” he said.

COMING DOWN SLOWLY

Banks have set aside plump loan-loss provisions, but Spain’s private debt load was “grotesque,” Dannhauser said.

“Markets are worried about the banks, and because the government ultimately stands behind the banks, they then become worried about the government,” he said.

Recession in Spain would have a big impact on Portugal, which is both deeper in debt and less competitive than its bigger neighbour. According to the Commission, Portugal has public-sector debt of 93% of GDP and private-sector debt of a whopping 249% of GDP.

Making matters worse, Portugal’s corporate debt to GDP is still as high as it was at the peak of the financial crisis.

And, on Lombard Street Research’s figures, the capacity of business to service the debt is stretched: non-financial company debt is 16 times pre-interest cash flow compared with 12 in Spain.

“As such, Portugal’s banking system is hugely exposed to the deepening recession,” Dannhauser said.

For the eurozone as a whole, the picture is a little brighter as firms in most of the larger countries have started to deleverage.

The ratio of debt to total assets has declined from a peak in 2009, as has their debt service burden, according to a study by Guntram Wolff and Eric Ruscher with Bruegel, a Brussels think tank.

The corporate debt-to-GDP ratio has also dipped, to 79% from 81% in late 2009, but it was just 60% as recently as 2000. As such, they said it was too early to sound the all-clear.

“The still very high level of indebtedness of non-financial corporations by historical standards points to remaining vulnerabilities, in particular in scenarios of high costs of debt financing,” Wolff and Ruscher said in a report.

© Thomson Reuters 2012

EU’s sovereign debt is nothing compared with Europeans’ household debt mountain

Somehow out of the blue, the strangely morbid yet delightfully Hollywood-esque story of Greek modern day Robin Hood Vassilis Paleokostas re-emerged today. Which, considering the latest developments out of Greece is probably oddly appropriate: if there is anything the Greek population needs now to finally free itself of its usurping, unelected and banker-appointed technocratic oligarchy, which does nothing but keep selling the nation ever further down the river just so it can use Greece as a passthru funding vehicle to keep Europe's banks solvent, it is many more like Paleokostas. And incidentally, so does the US, when considering the farce the country's "democratic process" has become, where both parties are merely representative agents of the Wall Street banking class (recall who the main funders are of the last three presidential campaigns). It is thus our belief that in keeping with the endless global Onion-esque farce that has gripped the world, Kodos (of Simpsons fame) is a perfect running mate for Paleokostas' presidential campaign - a campaign that is suitable not just for the US, but for any country which is controlled not by democratic checks-and-balances, but by bank issued checks (backed by nothing but electronic "money"). Because the farce will truly be strong with those two. And that, unfortunately, is all that makes any sense in this centrally planned world.

Courtesy of our own William Banzai, the campaign art work is already prepared.

Why Paleokostas? A brief primer on Paleokostas courtesy of badassoftheweek.com

Vassilis Paleokostas

What do you get when you cross Jesse James, Robin Hood, and Jack Bauer in the body of a giant, bearded, bald Greek man?
Meet Vassilis Paleokostas:

This crazy, utterly fearless dude is public enemy number one in Greece, and probably one of the most badass motherfuckers to come from the country since the days of our friend Leonidas.

Vassilis' story starts back in the early 90s, when he went on an insane crime spree of delicious armed robbery, blackmail, extortion, and kidnapping.  Basically, his modus operandi was to kidnap a super-rich bastard, hold him for a ridiculous ransom, and then sell him back to his stupid family in exchange for giant piles of cold, hard cash.  Then, he'd take that bling, keep a small percentage of it for himself, and distribute the rest of his newly-acquired wealth to impoverished farmers of the tiny rural province in which he grew up.  The dude quickly made a name for himself as the Robin Hood of Greece, and was beloved by fans of badassery, the people of the lower classes, and pretty much anybody else he wasn't in the process of robbing or extorting for money.  Shit, even the fucking people he kidnapped came out later and said that he was very polite and respectful to them while they were in captivity, and that it was pretty much the most pleasant kidnapping they'd ever experienced.  That should give you some indication of what this dude was all about – steal from the rich, give to the poor, make a profit in the process, and be completely awesome all of the goddamned time.  He also made a vow never to harm a member of the public in his criminal escapades.  He's been true to his word.

In true badass fashion, Vassilis Paleokostas also has a trusty sidekick – a lunatic Albanian named Alket Rizai.  Rizai is like the Friar Tuck in this story, only if instead of being a benevolent, staff-swinging priest, the clergyman was a crazy gunman with a hair-trigger and a penchant for firing automatic weapons at heavily-armed tactical police officers. Rizai is currently up on charges for murder, though I haven't really been able to track down any details about any of that (that's the problem with trying to research current events, I suppose).  My assumption is that he was being attacked by some evil corrupt officers sent by the Sherriff of Nottingham and responded by burning a full clip of Uzi ammunition into them, jumping through a plate glass window, rescuing a damsel in distress, and swinging off on a chandelier with a hot babe clinging to his rippling biceps.  According to a Greek friend of mine, this guy once blew up a known Mafia hangout by shooting it with a fucking rocket launcher.

Of course, the downside to being a career criminal – even a happy-go-lucky one who commits non-violent crimes in the name of the oppressed populace – is that eventually the long arm of the law is going to bitch-slap you in the fucking face really really hard. In 1995, Vassilis Paleokostas was caught by the fuzz, convicted of kidnapping, robbery, and weapons charges, and hauled off to a federal pound-me-in-the-ass penitentiary known as Korydallos Prison.

Now over the years, Korydallos Prison has gained a reputation as being one of the harshest and most brutal prisons in Greece. This place is like a mix between Andersonville, Oz, and that stupid plastic box they keep Magneto inside in the X-Men movies. The warden is a hardass son-of-a-bitch, the guards don't give a shit, and people that go inside the facility never come out.

Except Vassilis Paleokostas.

In June 2006, Paleokostas' older brother (another pathological criminal who is now serving jail time on 16 counts of armed robbery) commandeered a helicopter, and landed it right in the middle of the fucking exercise yard of the prison in broad daylight. The armed guards at Korydallos, not expecting to be subjected to such an unbelievable display of gigantic steel-plated testicles, assumed that this chopper belonged to the warden or the Chief of Prisons or something, and instead of investigating it they all decided to make sure their shoes were appropriately spit-shined so as not to incur a citation from their wrathful bosses. Vassilis (who had orchestrated the entire operation from the beginning) and his Albanian buddy simply walked up to the helicopter, hopped inside, and lifted off.  By the time the guards got their heads out of their asses and started firing their guns at the bird, it was already too late.  Paleokostas had escaped.

So the Greek police put out an all-points bulletin, and a nation-wide manhunt began for the Greek Robin Hood.  Officers, dogs, and federal agents scoured the countryside for this fugitive day and night, relentlessly following leads and doing everything in their power to bring this wanted criminal to justice.

Paleokostas evaded them for two and a half years.  He lived in the mountains outside Athens, evaded all attempts to recapture him, and even orchestrated another high-profile kidnapping in the process – snatching a powerful jackass CEO industrialist, ransoming him for a huge wad of cash, and once again distributing the loot to local farmers and families.  There are also rumors that he planned and executed another kidnapping while he was still incarcerated, which is bonus points no matter how you look at it.

In August 2008, Paleokostas was tracked down and re-captured by the Greek police.  He was placed in a different maximum security facility, where he was held for another six months, awaiting trial for his brazen escape in 2006.  On 21 February 2009, Vassilis Paleokostas was transferred back to his old home – Korydallos Prison.  His trial was to begin on the 23rd, and he was to stay in his former holding area while he stood trial for this crime.

But he never made it to trial.  The very next day, 22 February, ANOTHER FUCKING HELICOPTER showed up in the skies above Korydallos Prison.  It flew over a large tower of the prison, lowered a long rope ladder, and Vassilis Paleokostas and Alket Rizai climbed up into the chopper.  As the helicopter flew off into the sunset, the prisoners of Korydallos cheered.

Greek police opened fire on the chopper as it flew off, but a woman returned fire with an AK-47 assault rifle.  Now having hot Greek babes with automatic weapons come save your ass from prison isn't the sort of thing that happens to normal people every day, but that's just how things work out for you when you're a badass like Vassilis Paleokostas.

The police eventually tracked down the helicopter, and found that it had ditched on the side of the road outside Athens with a bullet hole in the gas tank.  According to the pilot, Paleokostas and his associates left the chopper and drove off on totally sweet motorcycles to an undisclosed location.  They also popped some totally bitchin' wheelies while doing so.

Vassilis not only earned his freedom for the second time, and once again showed the world that his ballsack is roughly the size of a small continent, but he also got some sweet delicious revenge on the motherfuckers in charge of the Greek prison system at the same time.  For allowing the same guy to escape the same prison in the same manner twice in a row, the Greek government fired the country's Chief of Prisons, the Inspector-General of Prisons, the warden of Korydallos, and three guards at the facility.  They all learned what it means to step to somebody as awesome as the Greek Robin Hood.

Vassilis Paleokostas is fully rad because he kicked ass, won the respect of the people, said "fuck you" to the police, and managed to single-handedly place the country's three top-ranking prison officials in the back of the unemployment line.

He is still at large.

And why Kodos? Simple

Paleokostas/Kodos 2012

Looks like the American consumer is making a return. And not with the money stuffed in the mattress. Card issuers were more than eager to take advantage of the American consumer returning to the stores. The number of cards issues jumped 14% in 2011 to about 42 million.

In addition to the new cards being issued, the annual rate of Americans failing to pay their credit card bills has dropped to the lowest rate since 1995. It should be noted there was a sequential increase of delinquencies from the third to fourth quarter. The increase of 5% was not big enough to effect the overall decline.

Among analysts there is a hope that this is signalling the end of the unwind of the riskier accounts and now consumers are on a healthier credit footing. One worry for consumers is the rise in gas prices. This could put renewed pressure back on household finances leading to a rise in delinquencies.

Stocks to watch in the credit card sector include American Express Company (NYSE:AXP), Visa Inc. (NYSE:V) and Mastercard Inc. (NYSE:MA).

American Express Company (NYSE:AXP) is up .11% today on choppy trading. Lack of overall direction in the market is keep the stock range bound. Weaker data out of Europe and the lackluster deal in regards to Greece are keep financial stocks subdued today. Volume on the stock will finish below the 3-month average as the overall market continues to lack substantial volume.

Visa Inc. (NYSE:V) is bucking the trend today, up 1.23% on average volume. The company announced this morning an agreement with Monitise and HDFC Bank (second-largest bank in India) for a mobile payment system. Open to any mobile subscriber, it can be used with the most basic of mobile phones.

Mastercard Incorporated (NYSE:MA) is 1.45% higher in midday trading at $405.37. MA is set to finish the day with average volume as it has already traded 615 thousand shares so far. The stock trades just over a million shares on average. MA shares are up nearly $50 this month as the company’s profits jumped 24% in its last quarterly earnings.

Credit Card Numbers Increase. Stocks to Watch – AXP, V, MA

Day after day, the long overdue correction of gold to fair value which as we have discussed previously, is now at about $2000 based on the recent multi-trillion Central Bank balance sheet expansion, keeps getting delayed, providing cheap entry points to all real money adherents. And then we get moments like the past 10 minutes, when gold goes on the same kinds of buying sprees that we remember best from the summer of 2011. With no news at all, in a span of minutes, both gold and silver have soared, with gold touching on $1772, and now about $150 away from its all time highs. The return of gold now is 13% YTD, compared to the far lower 8.4% return for the general market. Why the move? A big buyer obviously. But besides that, why the hell not - when one considers that the last time gold was over $1900, total central bank assets were $2 trillion less, it is a miracle gold is not far, far higher. The catalyst this time according to some is the "sudden realization" that in one week the ECB's balance sheet is about to increase by at least 20% courtesy of the latest and greatest LTRO. According to others, it is "more buyers than sellers." Both are right. As a reminder: we have warned repeatedly that the massive balance sheet expansion is spilling over out from equities and into everything else, including gas and now, gold. We pointed out that the biggest trade off of a soaring market could well be the one thing that derails Obama's presidential campaign. Now the only other thing that could stop central bankers from their CTRL+P frenzy - the surge in real money - is starting, and unlike 2011, it is starting quite early this time around. As we said over the weekend: inflation is a-coming back.

In Eerie Replay Of 2011, Gold Spikes Abruptly To Over $1770, Silver Follows

Central European Media Enterprises (NASDAQ:CETV) is down 18.12% in midday trading at $6.95. CETV has traded 1.4 million shares at midday, more than 3 times its daily average. CETV shares are tumbling today after its quarter loss widens. The company’s net loss was $77.2 million. The company has a market cap of 450.75 million.

Mattson Technology, Inc. (NASDAQ:MTSN) is down 15.36% today at $2.70. MTSN has traded 1.4 million shares so far today, above its daily average of 487 thousand shares. Mattson released its annual report earlier this morning. The company has a market cap of 157.93 million.

Newfield Exploration Company (NYSE:NFX) is down 12.19% in midday trading at $37.10. NFX has traded 7.3 million shares today, nearly 4 times its average volume. Newfield released fourth quarter results late yesterday. The company posted net income of $68 million and revenue of $677 million. Adjusted net income came in at $0.95 per share, falling short of Wall Street estimates of $697.4 million. The company has a market cap of 4.93 billion.

Brightpoint, Inc. (NASDAQ:CELL) is down 10.30% today at $8.97. CELL has traded 1.1 million shares in midday trading, close to double the stock’s average volume. CELL shares are down today after the company reduced its forecast for 2012 earnings to $1.13, down from $1.17. The company has a market cap of 607.37 million.

HyperDynamics Corporation (NYSE:HDY) is down 4.86% in midday trading at $1.37. HDY has traded 2.7 million shares today and trades 4 million shares a day on average. HDY shares continue to trade lower after a well the company drilled showed low amounts of oil. The company has a market cap of 226.87 million.

Radian Group Inc. (NYSE:RDN) is down 5.24% today at $3.88. RDN has traded 5.6 million shares so far today and trades 6.3 million shares on average. RDN shares are up more than $1 since the start of the year. Radian Group will have an earnings conference call tomorrow at 10am EST. The company has a market cap of 513.48 million.

Stocks Trading Lower In Midday Trading: CETV, MTSN, NFX, CELL, HDY, RDN

Little to note about today's unremarkable bond auction of $35 billion in 5 Year bonds. Hot on the heels of yesterday's just as unremarkable  2 year bond auction, which saw total US debt/GDP surpass 101% two weeks after total debt/GDP rose over 100% for the first time, the details surrounding today's issuance were more or less as expected: the closing yield of 0.90% was inside the When Issued of 0.905%. The Bid To Cover was 2.89, weaker than January's 3.17, but right inline with the TMM BTC of 2.89. The Indirects took down 41.8%, Directs 12.9%, and the Dealers held at 45.3%, all in line with TTM average, so nothing to write home about. Overall an auction that just added a few pips to the total US debt/GDP, with the proceeds, especially by the Dealers, promptly to be pledged back into the repo market with the blessings of BoNY and State Street, where it is never heard from again.

Treasury Prices $35 Billion In Forgettable 5 Year Auction

Lack of investment and long-term planning in the Peruvian electrical system are threatening to wreck billionaire mining projects, considered key to the economic growth of the country, reports today local newspaper El Comercio.

Together with the uncertain regulations, an excessive reliance on the nascent natural gas industry and the fierce environmental opposition to new transmission lines, the looming energy problem is making of Peru-based mining industry a extremely vulnerable one.

Based on the current energy needs, the second world producer of silver and copper would need to invest at least US$1 billion a year to be able to ensure sufficient power supply for the new mines, planned mainly by private investors.

“The economic development that the country expects to have could really be slowed down by a lack of electricity and, fundamentally, planning,” said former Mines and Energy Minister Carlos Herrera to El Comercio newspaper.

In the next ten years mining companies are expected to spend over US$50 billion in both exploration and production in Peru, but the country could miss out on that investments if it is not prepared to provide miners with basic energetic needs.

Without urgent actions, analysts believe Peru could suffer the same problem that affected South Africa in 2008 and Chile three years later, when different energy crises halted operations making metals prices soar.

“Five years may seem long, but not when it comes to a hydroelectric dam or a pipeline,” Herrera added.

Last year, demand for power rose by nearly 10% while installed capacity only increased by 1%. Current demand stands at 5GW, while effective capacity only offers a small buffer at 6.4GW.

Mines in northern and southern Peru, which mostly lack nearby generation plants and rely on transmission lines, could face a serious nip in a worst-case scenario.

Energy inefficiencies jeopardizing Peru’s mining future

Security Measures For Credit Card Processing

Leon Cooperman, founder of equity hedge fund Omega Advisors Inc., said buying U.S. Treasuries is the least attractive investment in a world of “financial repression.”

Bonds will be the worst place for investors to put their money for the next three years, Cooperman, 68, said in an interview today on Bloomberg Television’s “InsideTrack” with Erik Schatzker.

“With a 2 percent government bond, if we’re talking about marginal tax rates, you’re keeping 60 percent of your 2 percent — you’re keeping 1.2 percent,” he said. “The rate of inflation is somewhere in the range of 2 to 3 percent, so your capital is being confiscated. It makes no sense.”

Gold and Standard & Poor’s 500 shares will be attractive investments, Cooperman said. His target at the start of the year for the equity benchmark was 1,400 to 1,450. Cooperman’s New York-based fund invests in technology stocks including Apple Inc. and Qualcomm Inc., financial companies including JPMorgan Chase & Co. and Citigroup Inc. and health care stocks including WellPoint Inc. and Boston Scientific Corp.

Omega invested in Research In Motion Ltd., the Waterloo, Ontario-based manufacturer of BlackBerry smartphones, late last year and has since sold that position because it triggered stop- loss orders, Cooperman said. He has been a long-term investor in Apple and said he believes it is worth over $600 a share with “a couple more years of very good runway” growth ahead. Cupertino, California-based Apple gained 2.5 percent to close yesterday at $514.85 in New York trading.

Cooperman spent 25 years at Goldman Sachs & Co., including as CEO of Goldman Sachs Asset Management, before founding Omega in 1991.

Bloomberg.com

Investing in U.S. Treasuries ‘Makes No Sense’