Archive for January 30th, 2012
The Banks Are Still Scamming
More than half of the derivatives- trading business of Goldman Sachs Group Inc. (GS), Morgan Stanley and three other large banks could fall largely outside the Dodd- Frank Act if they succeed in lobbying regulators to exempt their overseas operations, government records show.
The debate over the reach of Dodd-Frank has been among the most contentious aspects of the regulatory overhaul enacted by President Barack Obama after the 2008 credit crisis. The banks have met with regulators, testified to Congress and filed dozens of letters contending that they will suffer a competitive disadvantage if the regulations apply to their foreign arms.
Bluntly: “F” ‘em.
There’s a simple solution to this problem — if you want to do business with a United States banking license, you will bring all operations worldwide under US laws.
If you don’t want to do that then leave. Some other enterprising entity will then take the business from you, since you won’t be able to run securities in the US at all.
Our market is plenty large to attract entrepreneurs (if not existing smaller banks) to fill the vacuum. The premise that being the largest campaign contributors to both parties should give the banks the ability to effective buy regulators is nonsense — our nation’s response to this, whether from OWS, the “Tea Party” or simply from the American people, should be one giant middle finger and the jingling of a pair of handcuffs for those who want to continue to press the issue.
I’ve had enough of this crap and you should have as well.
Another Law That Doesn’t Apply To “Big (Bank) People”
How many more examples do we need to see before the people demand handcuffs — and threaten that if they don’t see them applied to the pigmen they’ll take matters into their own hands?
Nearly three months after MF Global Holdings Ltd. collapsed, officials hunting for an estimated $1.2 billion in missing customer money increasingly believe that much of it might never be recovered, according to people familiar with the investigation.
As the sprawling probe that includes regulators, criminal and congressional investigators, and court-appointed trustees grinds on, the findings so far suggest that a “significant amount” of the money could have “vaporized” as a result of chaotic trading at MF Global during the week before the company’s Oct. 31 bankruptcy filing, said a person close to the investigation.
Nonsense. Money does not “vaporize.” It goes somewhere through someone. In this case…
As money poured out of MF Global, much of it likely passed through J.P. Morgan Chase & Co. and other banks where the securities firm had accounts, as well as trade-clearing partners such as Depository Trust & Clearing Corp. and LCH.Clearnet Group Ltd., people familiar with the matter said.
Now here’s the scam. Try receiving stolen property as any ordinary business or person and then claim that you don’t have to give it back (even if it’s gone later on) and see how well that works.
You’ll lose and be forced to give it back — even if you don’t have it any more.
There are, of course, exceptions that various entities have managed to get written into the law. One of the more-outrageous in recent years has been pawn shops, where you can find your stolen property, be able to prove it’s yours, and yet be forced to buy it back — even though the pawn shop has no legal title to it as the seller (who stole it) never had title to convey.
Common business balance and in fact the law in virtually every other case requires that if the title to whatever you receive is defective your recourse is against the person who sold it to you — you can’t acquire title to something that the seller never lawfully had!
But when it comes to segregated funds, which are allegedly held in escrow for customers and are represented as same by every brokerage in the land, it appears this principle doesn’t apply. If it did then banks would be really careful about taking moved funds proffered in response to a margin call or other “stress” situation and require proof that the funds were in fact owned by the firm tendering them, lest they be forced to cough them back up.
That in turn would stop these frauds cold.
And make the pigmen legally and financially responsible for their scams.
The only way we’re ever going to see these schemes and scams stopped is when we, the people, demand and are willing to back up our demand to whatever degree is necessary that the same laws that apply to you and I when we accept transfer of some property — that we cannot acquire title to something if the seller does not have lawful title himself — be applied to the pawn shops, the banksters and other “connected” institutions and people.
Think filing for bankruptcy is the only way to get debt discharge? Think again, at least in Greece. While previously we have reported that Greek courts had written off “untenable” debts of unemployed Greeks owed to local banks, Kathimerini describes a landmark case which may have profound implications for the indebted country, in which a fully employed woman has had the bulk of her debt written off. From Kathimerini: “In what could turn out to be a significant ruling for Greeks suffering from the economic crisis, a court in Hania, Crete, has become the first in the country to order that the majority of the debt owed to banks by someone still in full employment be wiped out. Sunday’s Kathimerini understands that the Justice of the Peace Court in Hania based its decision on a 2010 law that allows judges to give protection to people struggling to meet their financial commitments. Until now, the legislation has only been used to give debt relief to unemployed people or those with no substantial income.” This means that virtually every indebted person in Greece, regardless of employment status will rush into court rooms, demanding equitable treatment and a similar debt write down. It also means that the Greek bank sector, already hopelessly insolvent, is about to see its assets, aka loans issued to consumers, about to be written off entirely. And since the ultimate backstopper of the entire Greek financial system is the ECB, the creeping impairments will have no choice but to impact, very soon, the mark-to-market used by both the ECB and the various national banks. Finally, how long before other courts in Europe express solidarity with their own citizens and proceeds with similar resolutions?
On the specifics of the write off:
in the Hania case, the court ruled in favor of a full-time civil servant. The divorced woman, who has three children, asked to be given protection after her banks refused to offer her new terms for combined loans of 112,000 euros. The unnamed woman explained that she did not have any assets she could sell to pay off her debt.
In its ruling, the court deemed that the woman, who has moved in with her parents, needs 350 euros a month to cover her own costs but that the rest of her earnings could be distributed equally among the three banks she owes money to. The judge deemed that this process should last for four years, meaning the woman would pay back some 30,000 euros and the remaining 82,000 would be written off.
And the implications:
Thousands of people have already appealed to the courts for protection under the 2010 law but legal experts believe the decision in Hania may lead to a new wave of appeals by Greeks who still have jobs but are unable to repay their loans.
Needless to say, this simply means that as locals realize that a domino effect in which bank assets are written down will necessitate a collapse of bank balance sheets, and the asset side of the ledge will be unable to support deposits held by local banks. Which is unfortunate as December saw the first modest signs of a rebound in Greek deposits, which rose modestly from €173 billion to €174 billion following years of consecutive declines.
Outrageous! The Government Is Giving Out Free Cell Phones And Free Cell Phone Minutes To Welfare Recipients
Did you know that the federal government is giving out free cell phones and free cell phone minutes to welfare recipients? It may be hard to believe, but it is true. Right now, there are companies that are running advertisements specifically targeted at low income Americans informing them of the fact that all they have to do is sign up and they can get a free cell phone and hundreds of free cell phone minutes every single month and it will all be paid for by the federal government. Some have referred to this as “The Obama Phone”, but that is not exactly accurate. The outrageous federal programs that are paying for this were initiated before Barack Obama entered the White House. But the fact that welfare recipients have been receiving free cell phones and free cell phone minutes under both the Bush and Obama administrations has been confirmed as being true by Snopes. All of this is paid for by “the federal Universal Service Fund”. That is one of those annoying little taxes that you may have noticed on your phone bill. So what is essentially happening is the federal government is taking money from all of us so that they can provide free cell phone service for welfare recipients every single month.
When some of my readers informed me of this free cell phone scheme, I decided that I better go to the source. So I went over to the FCC website, and it turns out that there are two federal programs involved. “Link Up” provides a one-time connection discount on phone service, and it can be applied to the cost of a cell phone. So this is where the free cell phone comes from. “Lifeline” provides a monthly discount on telephone service. So this is where the free cell phone minutes each month come from. The following is a description of these programs from the FCC website….
What Benefits are Available Under the Lifeline and Link Up Programs?
- Lifeline provides discounts on one basic monthly telephone service (wireline or wireless) for qualified subscribers. These discounts can be up to $10.00 per month, depending on your state. Federal rules prohibit qualifying low-income consumers from receiving more than ONE Lifeline service at the same time. That is, qualifying low-income consumers may receive a Lifeline discount on either a home telephone or wireless telephone service, but may not receive a Lifeline discount on both services at the same time. Lifeline also includes Toll Limitation Service, which enables a telephone subscriber to limit the amount of long distance calls that can be made from a telephone.
- Link Up Up provides qualified subscribers with a one-time discount (up to a maximum of $30) off of the initial installation fee for one traditional, wireline telephone service at the primary residence or the activation fee for one wireless telephone. It also allows subscribers to pay the remaining amount they owe on a deferred schedule, interest-free. Federal rules prohibit qualifying low-income consumers from receiving more than ONE Link Up discount at a primary residence. That is, qualifying low-income consumers may receive a Link Up discount on installation or activation charges associated with either a home telephone or wireless telephone service.
Apparently these programs are becoming quite popular.
You can find a company called Safelink Wireless offering welfare recipients a free cell phone and 250 free cell phone minutes a month right here.
You can find a company called Assurance Wireless offering welfare recipients a program that is virtually identical right here.
This is absolutely outrageous, and it is yet another sign that dependence on the government is totally out of control.
Not that assisting the poor is bad. Of course we always want to help those that cannot help themselves. We never want to see anyone go without daily food or sleep in the streets.
But providing the poor with the basics of life is much different from providing them with luxuries such as cell phones.
In some areas of the country, the poor can also receive nearly free Internet service every single month.
Just check out the following example from the Houston Chronicle….
When Comcast acquired NBC Universal earlier this year, an FCC-mandated requirement was that the cable giant offer cheap Internet access to low-income households. Comcast is making good on the mandate through a new program called Internet Essentials.
Families who qualify will be able to sign up for 1.5-Mbps Internet access – the same download speed as AT&T’s basic DSL service – for just $9.95 a month. Customers may also be eligible for a computer that costs just $150 and free Internet training.
Also, a new bill has been introduced in Congress that would give “eligible” households money to help pay for gasoline….
Low-Income Gasoline Assistance Program Act – Directs the Secretary of Health and Human Services to make grants to states to establish emergency assistance programs to pay eligible households for the purchase of gasoline.
These days, as long as you are “eligible”, just about everything you need will either be purchased for you or subsidized by the federal government.
Yes, we will always need programs to help take care of the poor, but some of the things that go on today are absolutely outrageous.
There are millions of people out there that have become extremely comfortable receiving government benefits and it will be extremely difficult to ever get them to give them up.
After all, why bust your behind for 40 or 50 hours a week at some meaningless, low paying job when you can live a similar lifestyle by just depending on government benefits?
The following is a rap video that shows the kind of mindset that is developing all across America. Please be advised that it contains some very strong language. It was done by a rapper known as “Mr. EBT”, and it is a perfect example of the kind of attitude that many welfare recipients have today….
Yes, everyone needs a helping hand once in a while. But if you do have to rely on government benefits for a time, you should be fighting like crazy to improve your situation so that you can get off of them as soon as possible.
Of course the biggest welfare recipients of all are the big corporations. The federal government showers billions upon billions of dollars on them every year, and this has got to stop.
The following example comes from an article in the Weekly Standard….
General Electric, one of the largest corporations in America, filed a whopping 57,000-page federal tax return earlier this year but didn’t pay taxes on $14 billion in profits. The return, which was filed electronically, would have been 19 feet high if printed out and stacked.
Can you imagine a 57,000 page federal tax return?
That is absolutely disgusting and it is a perfect example of how corrupt our system has become.
All year long, GE has people pouring over the tax code just looking for any little tax loophole that it can exploit.
GE made $14,000,000,000 in profits, but they paid less taxes to the government than you or I did.
There is something very, very wrong with that picture.
All of this unnecessary welfare has got to stop.
No more free cell phones for people on welfare.
No more giving billions of dollars in tax breaks to big corporations.
We simply cannot afford it.
The U.S. debt problem is way, way out of control. We have piled up the biggest mountain of debt in the history of the world, and it gets about 150 million dollars worse every single hour.
Sadly, none of this is likely to change any time soon.
The big corporations provide the money that our politicians need to win campaigns, and most of our politicians are very careful not to bite the hands that feed them.
On the other end of the spectrum, our economy continues to crumble and the number of poor Americans continues to increase. So even if we don’t provide them with free cell phones, the truth is that the number of Americans that need basic food and housing is not going to go down any time soon. In fact, it is going to go a lot higher in the years ahead.
We are rapidly becoming a European-style socialist welfare state.
In America today, the poor are absolutely showered with outrageous government benefits and so are the big corporations.
So who pays for all of this?
You and I do.
I am afraid that the joke is on us, and nothing is going to change as long as we keep sending the same kind of politicians back to Washington D.C. over and over.
European Union leaders gather for their first summit of 2012 as a deteriorating economy and struggle to complete a Greek debt writeoff risk sidetracking efforts to stamp out the financial crisis.
EU chiefs arrive in Brussels about 2 p.m. today to put the finishing touches on a German-led deficit-control treaty and endorse the statutes of a 500 billion-euro ($661 billion) rescue fund to be set up this year. Greece and its private creditors said Jan. 28 they expect to complete a deal in coming days after bondholders signaled they would accept European government demands for a bigger cut in their debt holdings.
Uh huh. That’s not the problem. The problem is that Germany is screaming that Greece must surrender its national sovereignty in order to continue to receive “help”, effectively becoming a vassal state of Germany.
In the meantime Sarkozy says he’s going to unilaterally impose a financial transactions tax. One wonders how he’s going to pull that off, given that I don’t think France re-installed a King. Or did they?
Here in the US we still won’t face reality — although it’s at least being talked about in the media now.
The level of debt held now by governments, the financial industry and especially consumers remains a greater drag on the U.S. than in 1983, Reinhart said Jan. 27 in a radio interview from Davos on “Bloomberg Surveillance” with Tom Keene and Ken Prewitt. In the third quarter of 2011, total household debt was 86 percent of GDP, compared with 47 percent in the third quarter of 1983, according to the U.S. Commerce Department.
“The capacity for households to carry on to be the engine of growth that they have been in past recoveries is simply not there,” said Reinhart, a senior fellow at the Peterson Institute for International Economics in Washington.
Until this is recognized and we adjust for it we cannot have the sort of “recovery” everyone wants to see. That is, we never hit the bottom, we never purged the bad debt, and we never set the stage for a “recovery”, instead covering up the problems with more debt and fraud.
In the final three months of 1983, average after-tax personal income had risen 4.2 percent from a year earlier, adjusted for inflation, according to the Commerce Department. In the final quarter of last year, it had dropped 0.8 percent.
Now now, let’s stop the intentional misuse of statistics there Bloomberg, and instead look at what we had just started doing back in 1983….
So did personal income actually rise? Hmmmm…. we added, in 1983, a bit more than $100 billion in GDP. But we also added $176 billion in debt, which means we were borrowing the so-called “increase” in after-tax personal income, we were not earning it. Indeed, here’s the debt and GDP addition numbers for the quarters from 1981 through 1989:
|Quarter||New Debt||New GDP|
We didn’t grow at all — we borrowed from roughly 2x to nearly 5x the increase in output each and every quarter during Reagan’s so-called “recovery”!
This is the fundamental scam that we have run for the last 30 years and we’re still not talking about it honestly! Until we do and we reconcile the overblown asset prices and costs that go into both business and personal life that have come with this debt there can be no durable recovery — only further attempts to blow more Ponzi-style bubbles.
The problem is that in order to blow another asset bubble you need to find an asset where leverage is reasonably low and can be cranked up so as to support it, at least for a while.
But we seem to be all out of those unencumbered assets……
Submitted by Brandon Smith from Alt Market
Baltic Dry Index Signals Renewed Market Collapse
Much has been said about the Baltic Dry Index over the course of the last four years, especially in light of the credit crisis and the effects it has had on the frequency of global shipping. Importing and exporting has never been quite the same since 2008, and this change is made most obvious through one of the few statistical measures left in the world that is not subject to direct manipulation by international corporate interests; the BDI. Today, the BDI is on the verge of making headlines once again, being that is plummeting like a wingless 747 into the swampy mire of what I believe will soon be historical lows.
The problem with the BDI is that it is little understood and often dismissed by less thoughtful economic analysts as a “volatile index” that is too “sensitive” to be used as a realistic indicator of future trends. What these analysts consistently seem to ignore is that regardless of their narrow opinion, the BDI has been proven to lead economic derision in the market movements of the past. That is to say, the BDI has been volatile exactly BECAUSE markets have been volatile and unstable, and is a far more accurate thermometer than those that most mainstream economists currently rely on. If only they would look back at the numbers further than one year ago, they might see their own folly more clearly.
Introduced in 1985, the Baltic Dry Index first and foremost is a measure of the global shipping rates of dry bulk goods, mostly consisting of vital raw materials used in the creation of other products. However, it is also a measure of demand for said materials in comparison to previous months and years. This is where we get into the predictive nature of the BDI…
In late 1986, for instance, the BDI fell to its lowest level on record, then, began a slow crawl towards moderate recovery, just before the Black Monday crash of 1987.
Coincidence? Not a chance. From 2001 to 2002, a similar sharp collapse in the BDI preceded a progressive drop in the Dow of around 4000 points, ending in a highly suspect (Fed engineered) illegitimate recovery. In 2008, the index fell to near record lows once again just before the derivatives and credit crisis hit stocks full force. To imply that the BDI is not a useful measure of future economic trends seems like an astonishingly ignorant proposition when one examines its very predictable behavior just before major financial downturns.
This is not to suggest that the BDI can be used as a way to play the stock market from day to day, or often even month to month. MSM analysts rarely look further than the next quarter when considering any financial issue, and that is why they don’t understand the BDI. If an index cannot be used by daytraders to make a quick buck in a short afternoon, then why bother with it at all, right? The BDI is not an accurate measure of the daily market gamble. It is, though, an accurate measure of where markets are headed in the long run and under extreme circumstances.
Over the course of the past month, the BDI has fallen around 65% from above 1600 to 726. Mainstream economists argue that the BDI’s fall in 2008 was a much higher percentage, and thus, a 65% drop is nothing to worry about. They fail to mention that shipping rates never recovered from the 2008 collapse, and have hovered in a sickly manner near lows reached during the initial credit bubble burst. By their logic, if the BDI was at 2, and fell to 1, this 50% drop should be shrugged off as inconsequential because it is not a substantial percentage of decline when compared to that which occurred in 2008, even though the index is standing at rock bottom. Yes, the useful idiots strike again…
Looking at the rate and the speed of decline this past month, it’s hard to argue that the current 65% drop is meaningless:
Another subversive argument against the BDI is the suggestion that it is not the demand for raw materials that is in decline, but the number of shipping vessels out of use that is growing. A smart person might suggest that these two problems are mutually connected. An MSM pundit would not.
In 2008, many ships were left to wallow in port without cargo, but this was due in large part to two circumstances. First, demand had fallen so much that too many ships were left to carry too little raw materials. Second, credit markets had sunk so intensely that many ships could not find trade financing necessary to take on cargo. In either case, the BDI still falls, and in either case, it still signals economic danger. The only way that the BDI could signal a major decline in shipping demand artificially or inaccurately is if a considerable number of ships under construction were suddenly released onto the market while there is no demand for them. There have been no mass increases or extreme changes in cargo fleets this past month, or at all since 2008, which means, the BDI’s decline has NOTHING to do with the number of ships in operation, and everything to do with decline in global demand.
What is the bottom line? The stark decline in the BDI today should be taken very seriously. Most similar declines have occurred right before or in tandem with economic instability and stock market upheaval. All the average person need do is look around themselves, and they will find a European Union in the midst of detrimental credit downgrades and on the verge of dissolving. They will find the U.S. on the brink of yet another national debt battle and hostage to a private Federal Reserve which has announced the possibility of a third QE stimulus package which will likely be the last before foreign creditors begin dumping our treasuries and our currency in protest. They will find BRIC and ASEAN nations moving quietly into multiple bilateral trade agreements which cut out the use of the dollar as a world reserve completely. Is it any wonder that the Baltic Dry Index is in such steep deterioration?
Along with this decline in global demand is tied another trend which many traditional deflationists and Keynesians find bewildering; inflation in commodities. Ultimately, the BDI is valuable because it shows an extreme faltering in the demand for typical industrial materials and bulk items, which allows us to contrast the increase in the prices of necessities. Global demand is waning, yet prices are holding at considerably high levels or are rising (a blatant sign of monetary devaluation). Indeed, the most practical conclusion would be that the monster of stagflation has been brought to life through the dark alchemy of criminal debt creation and uncontrolled fiat stimulus. Without the BDI, such disaster would be much more difficult to foresee, and far more shocking when its full weight finally falls upon us. It must be watched with care and vigilance…