STOCK MARKET WATCH -- Friday, 29 May 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Friday, 29 May 2015[font color=black][/font]

SMW for 28 May 2015

AT THE CLOSING BELL ON 28 May 2015
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Dow Jones 18,126.12 -36.87 (-0.20%)
S&P 500 2,120.79 -2.69 (-0.13%)
Nasdaq 5,097.98 -8.62 (-0.17%)


[font color=red]10 Year 2.14% +0.01 (0.47%)
30 Year 2.89% +0.01 (0.35%) [font color=black]


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Matt Taibi: Secret and Lies of the Bailout


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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts







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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. Michael Hudson: Ukraine’s “Operation Vulture” and Labor Protests

http://www.nakedcapitalism.com/2015/05/michael-hudson-ukraines-operation-vulture-and-labor-protests.html

By Michael Hudson, a research professor of Economics at University of Missouri, Kansas City, and a research associate at the Levy Economics Institute of Bard College. His latest book is “The Bubble and Beyond.”

Ukraine’s collapse since the February 2014 coup has become an umbrella for grab-it-ization. Collateral damage in this free-for-all has been labor. Many workers are simply not getting paid, and what they actually is being paid is often illegally low. Employers are taking whatever money is in their business accounts and squirreling it away – preferably abroad, or at least in foreign currency. Wage arrears are getting worse, because as Ukraine approaches the eve of defaulting on its €10+ billion London debt, kleptocrats and business owners are jumping ship. They see that foreign lending has dried up and the exchange rate will plunge further.

The Rada’s announcement last week that it shifted €8 billion from debt service to spend on a new military attack on the country’s eastern export region was the last straw for foreign creditors and even for the IMF. Its loans helped support the hryvnia’s exchange rate long enough for bankers, businessmen and others to take whatever money they have and as many euros or dollars as they can before the imminent collapse in June or July. In this pre-bankruptcy situation, emptying out the store means not paying workers or other bills. Wage arrears are reported to have reached 2 billion hryvnia, owed to over half a million workers. This has led the Federation of Trade Unions of Ukraine to picket against the Cabinet of Ministers on Wednesday (May 27). More demonstrations are scheduled for the next two Wednesdays, June 3 and 10. According to union federation Deputy Head Serhiy Kondratiuk, “the current subsistence wage of UAH 1,218 is 60% less than the level set in Ukrainian law, which is confirmed by the calculations of the Social Policy Ministry…the subsistence wage in the country should exceed UAH 3,500 a month, but the government refuses to hold social dialog to revise standards.”

The Scenario That is Threatened

Emptying out Ukrainian business bank accounts will leave empty shells. With Ukraine’s economy broken, the only buyers with serious money are European and American. Selling to foreigners is thus the only way for managers and owners to get a meaningful return – paid in foreign currency safely in offshore accounts, outside of future Ukrainian clawback fines. Privatization and capital flight go together. So does short-changing labor. The new buyers will reorganize the assets they buy, declare the old firms bankrupt and erase their wage arrears, along with any other bills that are owed. The restructured companies will claim that bankruptcy has wiped out whatever the former firms (or public enterprises) owed to workers. It is much like what corporate raiders do in the United States to wipe out pension obligations and other debts. They will claim to have to “saved” Ukrainian economy and “made it competitive.”

Operation Vulture

The Pinochet coup in Chile was a dress rehearsal for all this. The U.S.-backed military junta targeted labor leaders, journalists, and potential political leaders, as well as university professors (closing every economics department in Chile except for the Chicago “free market”-based Catholic University). You cannot have a “free market” Chicago-style, after all, without taking such totalitarian steps. U.S. strategists like to name such ploys after predatory birds: Operation Phoenix in Vietnam, and Operation Condor in Latin America that targeted “lefties,” intellectuals and others. A similar program is underway against Ukraine’s Russian speakers. I don’t know the code word being used, so let’s call it Operation Vulture. For labor leaders, the problem is not only to collect back wages, but to survive with a future living wage. If they refrain from protesting, they simply won’t get paid. This is why they are organizing a growing neo-Maidan protest explicitly on behalf of wage earners – so that the junta’s Right Sector snipers cannot accuse the demonstrators of being pro-Russian. The unions have protected themselves by seeking support from the UN’s International Labour Organization (ILO), and from the International Trade Union Confederation in Brussels.

The most effective tactic to tackle the corruption that is permitting the non-payment of wages and pensions is to focus on the present regime’s foreign support, especially from the IMF and EU. Using labor’s grievances as an umbrella to demand related reforms could include warnings that any sale of Ukrainian land, raw materials, public utilities or other assets to foreign buyers can be reversed by future, less corrupt governments. In labor’s favor is the fact that the IMF has violating its Articles of Agreement by lending for military purposes. As soon as its last loan was disbursed, Poroshenko announced that he was stepping up his war against the East. This brings the IMF loan close to being what legal theorists call an Odious Debt: debts to a junta taking power and looting the government’s Treasury and other assets in the public domain, leaving future governments to pay off what has been stolen.

Labor’s fight for a living wage is not only for retroactive shortfalls, but to put in place a recovery plan to protect against the economy being treated like Greece or Latvia, neoliberal style. U.S. strategists have been discussing whether they could dismiss the $3 billion that Ukraine owes Russia this December as an “odious debt”; or, perhaps, classify it as “foreign aid” and hence not collectible in practice. Ironic as it may seem, the Peterson Institute of International Economics, George Soros and other Cold Warriors have provided future Ukrainian governments with a repertory of legal reasons to reconstitute their economy foreign-debt free – leaving the government able to pay wage and pension arrears.

The alternative is for international creditors to win the case for putting foreign bondholders, the IMF and European Union first, and sovereign rights to prevent self-destruction second.

[Demeter]

7. Russian Mobile Crematoriums? Shades Of Saddams Mobile Weapons Labs! By Walrus.

http://turcopolier.typepad.com/sic_semper_tyrannis/2015/05/russian-mobile-crematoriums-shades-of-saddams-mobile-weapons-labs-by-walrus.html

"Bloomberg reporter Josh Rogin breathlessly tells us that the reason the United States Government cannot prove its allegations of direct Russian involvement of its troops in Ukraine in the form of dead Russian soldiers is because the Russian Government has deployed mobile crematoriums in the Donbass region to get rid of the bodies. Rogins evidence are statements from Two American politicians:

“The Russians are trying to hide their casualties by taking mobile crematoriums with them,” House Armed Services Committee Chairman Mac Thornberry told me. “They are trying to hide not only from the world but from the Russian people their involvement.”

Thornberry said he had seen evidence of the crematoriums from both U.S. and Ukrainian sources. He said he could not disclose details of classified information, but insisted that he believed the reports. “What we have heard from the Ukrainians, they are largely supported by U.S. intelligence and others,” he said.

Representative Seth Moulton, a former Marine Corps officer and a Democrat on the Armed Services Committee, was with Thornberry on the Ukraine trip in late March. He tweeted about the mobile crematoriums at the time, but didn’t reveal his sources. He told me this week the information didn’t come just from Ukrainian officials, whose record of providing war intelligence to U.S. lawmakers isn’t stellar."

http://www.bloombergview.com/articles/2015-05-26/putin-burns-his-dead-to-hide-ukraine-aggression

=============

Personally, this makes me want to cry. Exactly how gullible does the American Government think its citizens are? Do I need to remind anyone of the ongoing consequences of believing Saddam Hussien had, among other things, "mobile weapons labs"?

Does anyone not yet understand the concept of negative evidence: " The Russians MUST be fighting in Ukraine and if we can't find their dead bodies then they are cremating them on site!".

I had a quick look on the web for evidence of such machinery and by coincidence I found a very badly photoshopped video of an alleged Russian mobile crematorium dating from September last year. The source appears to be a Belorussian website: by24.org.

http://www.liveleak.com/view?i=efe_1410266111

[Demeter]

8. Will Greece Follow Ukraine’s Gamble?

http://blogs.piie.com/realtime/?p=5020&utm_source=feedburner&utm_medium=${feed}&utm_campaign=Feed:+${update}+%28${PIIE+Update}%29

After months of patient negotiations with its creditors, the Ukrainian government decided to gamble on May 19—by passing a motion through parliament to impose a moratorium on paying international bondholders. This calculated measure was taken after talks with creditors bogged down earlier in May. The stakes are high: The government needs to strike a deal with bondholders before June 15 or risk not receiving the next tranche of the $17.5 billion loan from the International Monetary Fund (IMF), plus some bilateral aid attached to it. This money is sorely needed as the economy is projected to decline between 5 percent and 8 percent this year, which will only increase the social tensions already apparent following recent government increases on energy prices.

What a difference a month makes. In April I met Ukrainian Finance Minister Natalie Jaresko on two occasions, and both times she seemed confident a deal is within reach. Her main point is that current debt levels are unsustainable and any deal with Ukraine’s international commercial creditors must include maturity extensions, coupon reductions, and principal reductions. Ukraine’s bonds now trade at 45 cents on the dollar, and Ukraine’s biggest creditor Franklin Templeton, which along with three other companies owns $8.9 billion of the nation’s debt, refuses to negotiate.

The government’s logic on the moratorium is simple: It has the right to spend taxpayer money on public services and not on repaying loans that were taken out by previous corrupt regimes. One can hardly disagree with this sentiment.

The current Greek government has frequently made the same argument....one question is whether Greece can use the increasing popularity of its logic to pressure its creditors...The answer is no, as there are considerable differences between the Greek and Ukrainian situations. First, by now much of the Greek debt is in the hands of the European Central Bank (ECB), and its president Mario Draghi is unlikely to be moved by such logic. Second, Greece already renegotiated the terms of its rescue package in 2012, when it became clear that the first IMF-EU program was failing. There is now little additional room to maneuver. And finally, too much precious time has already been lost in the standoff between Minister Varoufakis and his colleagues in the euro area.

The one takeaway for Greece from the current debt situation in Ukraine is that the IMF, the ECB, and the European Union—or the Institutions, as they are called in Athens—are not quick to help their partners. And if Ukraine feels abandoned, Greece has all the more right to feel so.

[Demeter]

2. I.R.S. Data Breach May Be Sign of More Personalized Schemes

http://www.nytimes.com/2015/05/28/business/irs-data-breach-may-be-sign-of-more-personalized-schemes.html

The plot to steal information on 100,000 taxpayers from the Internal Revenue Service and hijack nearly $50 million in refunds not only reveals a previous security breach but hints at a wider fraud that may bedevil Americans in the future.

Some security and tax experts warned that this latest data theft might be a prelude to more targeted schemes aimed at duping taxpayers into handing millions of dollars over to criminals or to help thieves circumvent the agency’s security filters next year and beyond.

“This breach is not just about what this single group is going to do with the information, but what happens when this information gets sold on the black market,” said Peter Warren Singer, the author of “Cybersecurity and Cyberwar: What Everyone Needs to Know.” “It’s rare for the actual attackers to turn the information directly into money. They’re stealing the data and selling it off to other people.” It is almost impossible to find a business or government agency that has not had some kind of security breach, he noted...

...

With the I.R.S., it was not the agency’s own system that was hacked. Criminals had already obtained individuals’ Social Security numbers, addresses and birth dates and then used the information to trick the network and gain access to taxpayers’ returns and filings through an application on the I.R.S. website. “There was no identity theft within the I.R.S.’s actual system,” said Aaron Blau, a tax expert in Tempe, Ariz. “These people already had all of this data. They could have used this information to call your bank, your doctor, your insurance carrier, and they would have gotten through 100 percent of the time. In this case they chose to use the I.R.S.”

Many Americans are being attacked more directly, Mr. Blau said. One popular scheme is to cold-call taxpayers and threaten them with prosecution if they do not immediately pay money supposedly owed to the I.R.S. by directing them to purchase a prepaid debit card and then transfer the money. Now, with more detailed information from returns, criminals could better target potential victims, and bolster their credibility with information stolen from taxpayer filings, Mr. Blau said. Reusable prepaid cards have become a magnet for fraud, according to law enforcement officials, with criminals often posing as bill collectors, government agents and others....

THE REST OF THE ARTICLE IS HAND-WRINGING AND HISTORY

[Demeter]

3. Time to Look Behind the Curtain and See Who is Against Full Employment APRIL 2013

http://www.nakedcapitalism.com/2013/04/time-to-look-behind-the-curtain-and-see-who-is-against-full-employment.html


Yves here. Have you noticed how political leaders are nowhere near as upset about unemployment as they ought to be? Ronald Reagan was far more concerned and took more aggressive measures when unemployment, measured more conservatively than it is now, reached 8% than Obama was when it was languishing over 8%. And now that is has fallen into the 7% range, he’s gone whole hog to implement deficit cuts which are sure to send jobless rates back up. So what gives? Put crudely, the corporocrats have discovered that if job markets are weak enough, they can keep all the benefits of productivity gains for themselves. The current economic “expansion” has labor getting a vastly lower share of GDP gains than any of its predecessors. Those at the top don’t care, since their incomes continue to pull away from the rest of us. So lousy employment levels aren’t a policy mistake, they are a covert policy aim. Look at how some employers, even now, complain that they can’t find “qualified” workers. If you investigate what is really going on, in the overwhelming majority of cases, they aren’t willing to pay enough to get decent people.

Michael Sawyer explains that seventy years ago, economist Michal Kalecki described the political dynamics that keep unemployment higher than it needs to be. An economy with high employment levels gives too much power to the wrong people and requires a bigger government sector, which undermines the claims of businessmen that their role is of supreme importance and their pet wishes should therefore take precedence.

By Michael Sawyer, Professor of Economics, University of Leeds, UK, and Managing editor International Review of Applied Economics. Cross posted from Triple Crisis and Back to Full Employment

In “Political Aspects of Full Employment,” a still widely cited article from 1943, Michal Kalecki raised many questions about the ability of a capitalist economy to maintain prolonged full employment — even though in light of the understanding of tools for stimulating aggregate demand and the use of fiscal policy brought about by the Keynesian ‘revolution.’ In a series of papers, Kalecki showed that the arguments against the use of budget deficits to secure full employment were invalid. Among these arguments, and their rebuttals, were that:

• deficits add to government debt, which is a burden on future generations
(rather, the government debt is bonds owned by individuals, pension funds etc.);

• deficits crowd out investment
(rather, they allow savings to take place and enable investment); and

• deficits cause higher interest rates
(the current situation makes the rebuttal to this clear).

Yet those arguments are still trotted out.

In “Fiscal austerity: The ‘cure’ which makes the patient worse” (Centre for Labour and Social Studies, Policy Paper), I have set out the arguments at greater length. Yet governments, often supported by international organisations such as the IMF and the OECD, continue to refuse to use budget deficits and other measures to secure a much higher level of economic activity.

Kalecki examined “three ways to full employment” – alternative ways in which demand could be stimulated: use of fiscal policy and budget deficits (he was sceptical that monetary policy could have much effect); stimulation of investment (where he queried how far that could go without the rate of profit falling); and tackling inequality (which would raise demand as spending power is moved from rich to poor). But instead of the use of fiscal policy, investment stimulation or policies to reduce inequality, governments have turned to combinations of austerity programmes, attempts at fiscal consolidation and the adoption of balanced ‘structural budgets’ as a policy objectives. Backed by questionable evidence from the IMF, governments have directed their focus on reduction of public expenditure rather than raising tax rates. The argument that the deficit must be reduced is used to justify any policy which cuts back on the role of the state, rather than raising taxes in a progressive manner. The British government amongst others is using the opportunity of recession and deficit mania to attack social security and welfare benefits.

The motives of the economic ‘experts’ and journalists, who represent particular financial interests and a ‘free market’ in their promotion of ‘there is no alternative’ to austerity and ‘structural reforms’ were well summarised by Kalecki:

Among the opposers of this doctrine (that full employment may be achieved by government spending) there were (and still are) prominent so-called ‘economic experts’ closely connected with banking and industry. This suggests that there is a political background in the opposition to the full employment doctrine, even though the arguments advanced are economic. That is not to say that people who advance them do not believe in their economics, poor though this is. But obstinate ignorance is usually a manifestation of underlying political motives.

Kalecki then argued that “the social function of the doctrine of ‘sound finance’ is to make the level of employment dependent on the state of confidence (‘Political Aspects of Full Employment,’ p.350).” Any policy which is seen to threaten the state of confidence is then argued to threaten investment and employment. Although the terminology of ‘the state of confidence’ is not often used, common arguments — for example, that regulation tax on corporate profits will damage investment (particularly in a globalised world) — are consistent with the point being made by Kalecki. Kalecki divided the “opposition of ‘industrial leaders’ to full employment by government spending” into three reasons: “dislike of government interference in the problem of employment as such,” “dislike of the direction of government spending (public investment and subsidizing consumption),” and “dislike of the social and political changes resulting from the maintenance of full employment.” Further, he argued that “subsidizing mass consumption is much more violently opposed by these experts than public investment. For here a moral principle of the highest importance is at stake. The fundamentals of capitalist ethics require that ‘you shall earn your bread in sweat’—unless you happen to have private means.”

The general thrust of economic policies among European countries in the past three years or so has been austerity programmes, often with the explicit intent of eliminating the budget deficit on a long-run basis. (The exceptions were some mild discretionary fiscal policy in early 2010, and allowing budget deficits to rise as ‘automatic stabilisers’ kicked in.) Austerity programmes have been combined with attempts at major reforms of the welfare state and the labour market. The general direction of those policies has been to reduce any power of organised labour, and to put downward pressures on wages and social security benefits. This was conveniently expressed by British Prime Minster David Cameron at the Davos summit in January 2013: “How do we succeed when other nations are growing, changing, innovating so fast? A lot of the answers are clear. Deal with your debts. Cut business taxes. Tackle the bloat in welfare. And crucially: make sure your schools and universities are truly world-class. In the UK we’ve been doing all these things. Less than three years in and we’ve cut the deficit by a quarter. Our corporation tax rate is the lowest in the G7. In welfare reform we’ve been radical. In education – revolutionary, busting open the state monopoly and allowing new schools to start up (Cameron, 2013).”

The welfare state and social security systems have many purposes, but in terms of the quote from Kalecki above, reducing the welfare state reduces “mass consumption,” and seeks to ensure that “you shall earn your bread in sweat.”

In the sweep of policy agendas in the aftermath of the financial crisis, many elements which consistent with the arguments of Kalecki. There is no need for austerity or for getting rid of budget deficits to the detriment of employment, and this suggests that the promotion of austerity and other policy initiatives such as ‘structural reforms’ serves other purposes. This is not to suggest some grand conspiracy, but rather that opportunities are being taken in different ways and forms to seek the creation of a de-regulated, more insecure labour market and reduced social protection.

Michal Kalecki 1899-1970, was a renowned economist, born in Poland, whose work and ideas are highly regarded amongst heterodox economists but ignored by mainstream economists. In The Economics of Michal Kalecki (Macmillan) I have reviewed all of his writings. Quotes in text are from Michal Kalecki, ‘Political Aspects of Full Employment’, Political Quarterly 1943.

[Demeter]

4. Understanding the Libor Scandal

http://www.cfr.org/united-kingdom/understanding-libor-scandal/p28729



Beginning in 2012, an international investigation into the London Interbank Offered Rate, or Libor, revealed a widespread plot by multiple banks-most notably Deutsche Bank, Barclays, UBS, Rabobank, and the Royal Bank of Scotland-to manipulate these interest rates for profit starting as far back as 2003. In 2015, investigations continued to implicate major institutions, exposing them to civil lawsuits and shaking trust in the global financial system.

Regulators in the United States, the UK, and the European Union have fined banks more than $9 billion for rigging Libor, which underpins over $300 trillion worth of loans worldwide. While several bankers and traders have also been brought up on criminal charges, these cases have been slow to go to trial. The scandal has sparked calls for deeper reform of the entire Libor rate-setting system, as well as harsher penalties for offending individuals and institutions, but so far change remains piecemeal.

What is Libor?

Libor is a benchmark interest rate based on the rates at which banks lend unsecured funds to each other on the London interbank market. Published daily, the rate was previously administered by the British Bankers' Association (BBA). But in the aftermath of the scandal, Britain’s primary financial regulator, the Financial Conduct Authority (FCA), shifted supervision of Libor to a new entity, the ICE Benchmark Administration (IBA), an independent subsidiary of the private exchange operator Intercontinental Exchange, or ICE.

In order to calculate the Libor rate, a representative panel of global banks submit an estimate of their borrowing costs to the Thomson Reuters data collection service each morning at 11:00 a.m. The calculation agent throws out the highest and lowest 25 percent of submissions and then averages the remaining rates to determine Libor. Calculated for five different currencies-the U.S. dollar, the euro, the British pound sterling, the Japanese yen, and the Swiss franc-at seven different maturity lengths from overnight to one year, Libor is the most relied upon global benchmark for short-term interest rates. The rate for each currency is set by panels of between eleven and eighteen banks.

How does Libor affect global borrowing?

Many banks worldwide use Libor as a base rate for setting interest rates on consumer and corporate loans. Indeed, hundreds of trillions of dollars in securities and loans are linked to Libor-government and corporate debt, as well as auto, student, and home loans, including over half of America's flexible-rate mortgages. When Libor rises, rates and payments on loans often increase; likewise, they fall when Libor goes down. Libor is also used to "provide private-sector economists and central bankers with insights into market expectations of economic performance and interest rate developments," explains the IBA.

MORE

[Demeter]

6. City trader accused of being 'ringmaster' in Libor-rigging fraud boasted: 'You want every little bit

http://www.dailymail.co.uk/news/article-3097327/City-trader-accused-ringmaster-Libor-rigging-fraud-boasted-want-little-bit-money-possibly-get.html

A 'greedy' City trader accused of involvement in a huge scam to rig the lending rates paid between banks boasted: 'You want every little bit of money you can possibly get,' a court heard.

Tom Hayes, 35, a former employee of Switzerland's UBS and America's Citigroup, allegedly plotted to manipulate the London Interbank Offered Rate - known as Libor - to score enormous profits.

The Tokyo-based trader - who earned £3.5million from Citigroup for just nine months work - is alleged to have done 'everything in his power' to manipulate the interest paid by banks when lending to one another between 2006 and 2010.

In doing so, the rates are said to have been rigged to his financial advantage, and therefore to the financial disadvantage of those with whom he was trading...

Read more: http://www.dailymail.co.uk/news/article-3097327/City-trader-accused-ringmaster-Libor-rigging-fraud-boasted-want-little-bit-money-possibly-get.html#ixzz3bUV0xnBA
Follow us: @MailOnline on Twitter | DailyMail on Facebook

[Demeter]

5. JPMorgan Chase Writes Arrogant Letter to Its Swindled Forex Customers By Pam Martens and Russ Marten

http://wallstreetonparade.com/2015/05/jpmorgan-chase-writes-arrogant-letter-to-its-swindled-forex-customers/

As the U.S. Department of Labor deliberates giving JPMorgan Chase a waiver to continue business as usual after it pleaded guilty to a felony charge for engaging in a multi-bank conspiracy to rig foreign currency trading, a letter the bank sent to its foreign currency customers should become Exhibit A in the deliberations. The letter effectively tells JPMorgan’s customers, here’s how we’re going to continue to rip your face off.

Two sections of the letter stand out in particular. One section reads:

“As a market maker that manages a portfolio of positions for multiple counterparties’ competing interests, as well as JPMorgan’s own interests, JPMorgan acts as principal and may trade prior to or alongside a counterparty’s transaction to execute transactions for JPMorgan…” (Italic emphasis added.)

Most of the general public believes that proprietary trading (trading for the house) was outlawed by the Volcker Rule under the Dodd-Frank financial reform legislation. Most of the public believes that trading ahead of your client’s order is called front-running and is illegal. On both points, the public is dead wrong. First, the Volcker Rule has yet to be implemented. Its effective date continues to be pushed forward. Secondly, foreign exchange spot trading between big banks and institutions (like the folks who manage your pension money) is an unregulated market left to the non-legally-binding “best practice” agreements by the biggest banks. As we reported on May 14, the Chair of the group drawing up these best practices is Troy Rohrbaugh, the head of Foreign Exchange trading at JPMorgan Chase since 2005 – including the periods for which the bank has been charged with felony conduct. Making this best practice committee even more specious is that it is sponsored by the Federal Reserve Bank of New York, part of the Federal Reserve which just fined JPMorgan Chase $342 million for lacking “adequate Firm-wide governance, risk management, compliance and audit policies and procedures to ensure that the Firm’s Covered FX (foreign exchange trading) Activities conducted at the FX Subsidiaries complied with safe and sound banking practices, applicable U.S. laws and regulations, including policies and procedures to prevent potential violations of the U.S. commodities, antitrust and criminal fraud laws, and applicable internal policies…”

Another section of the JPMorgan letter states:

“JPMorgan is not required to disclose to a counterparty when the counterparty attempts to leave an order that JPMorgan is handling other counterparties’ orders or JPMorgan orders ahead of, or at the same time as, or on an aggregated basis with, the counterparty’s order. JPMorgan is under no obligation to disclose to a counterparty why JPMorgan is unable to execute the counterparty’s order in whole or in part, provided that JPMorgan will be truthful if we agree to disclose such information.” (Italic emphasis added.)

In other words, despite five of the largest banks in the world pleading guilty to felonies, JPMorgan Chase still is not required to disclose a flaming conflict of interest to a customer unless it chooses “to disclose such information.” Welcome to the world of the still unregulated Wall Street — despite its crashing the U.S. economy in 2008, over $13 trillion in loans and bailouts, nonstop charges of plundering the little guy and violating the public trust.

MORE

[Demeter]

9. KRUGMAN: Grexit and the Morning After

http://krugman.blogs.nytimes.com/2015/05/25/grexit-and-the-morning-after/?_r=0

We just had another electoral earthquake in the euro area: Podemos-backed candidates have won local elections in Madrid and Barcelona. And I hope that the IFKAT — the institutions formerly known as the troika — are paying attention.

The essence of the Greek situation is that the actual parameters of a short-run deal are clear and unavoidable: Greece can’t run a primary budget deficit, because nobody will lend it new money, and it won’t (and basically can’t) run a large primary surplus, because you can’t squeeze even more blood from that stone. So you would think that an agreement for Greece to run a modest primary surplus over the next few years would be easy to reach — that is what will happen, so why not make it official? But now the IMF is playing bad cop, declaring that it cannot release funds until Syriza toes the line on pensions and labor market reform. The latter is dubious economics — the IMF’s own research doesn’t support enthusiasm about structural reforms, especially in the labor market. The former probably recognizes a real problem — Greece probably can’t deliver what it has promised pensioners — but why should this be an issue over and above the general question of the primary surplus.

What I would urge everyone to do is ask what happens if Greece is in fact pushed out of the euro. (Yes, Grexit — ugly word, but we’re stuck with it.) It would surely be ugly in Greece, at least at first. Right now the core euro countries believe that the rest of the euro area can handle it, which might be true. Bear in mind, however, that the supposed firewall of ECB support has never actually been tested. If markets lose faith and the time for ECB purchases of Spanish or Italian bonds arises, will it really happen?

But the bigger question is what happens a year or two after Grexit, where the real risk to the euro is not that Greece will fail but that it will succeed. Suppose that a greatly devalued new drachma brings a flood of British beer-drinkers to the Ionian Sea, and Greece starts to recover. This would greatly encourage challengers to austerity and internal devaluation elsewhere. Think about it. Just the other day the Very Serious Europeans were hailing Spain as a great success story, a vindication of the whole program. Evidently the Spanish people don’t agree. And if the anti-establishment forces have a recovering Greece to point to, the discrediting of the establishment will accelerate.

One conclusion, I guess, is that Germany should try to sabotage Greece post-exit. But I hope that will be considered unacceptable. So think about it, IFKATs: are you really sure you want to start going down this road?


OH, I'D BET REAL MONEY ON IT--GERMANY WILL TRY TO SABOTAGE GREECE IF IT MANAGES TO ESCAPE DEUTSCHLAND'S GREEDY CLUTCHES.

[Demeter]

10. Charges against Icelandic banks for money counterfeiting

http://www.positivemoney.org/2015/05/charges-icelandic-banks-money-counterfeiting/

The Homes Association of Iceland, announced the filing of a charge to local police against all executives of all banks in Iceland:

The motivation for this charge is a recent report about the monetary system by member of parliament Frosti Sigurjónsson, commissioned by the Prime Minister’s Office. The report states very clearly that banks have in fact been creating new money when they issue loans in the form of new deposits which add to the supply of money already in circulation.

This kind of money creation is clearly in opposition to the sole right of the Central Bank of Iceland to issue bank notes and coins or any equivalent currency to be circulated as legal tender. Therefore it is inevitable to consider the electronic money creation of banks to effectively constitute money counterfeiting as defined by Article 150 of the General Penal Code No. 19/1940.

The Homes Association would also like to welcome the report about the monetary system by MP Frosti Sigurjónsson, as it clearly shows how fractional reserve banking has done great harm to the Icelandic homes and the national economy. The Homes Association encourages everyone to read the report and support its proposals of monetary reform. In order for the monetary system to serve the public interest it is vitally important to make substantive reforms.

Article 150 of the General Penal Code No. 19/1940 reads:

Anyone counterfeiting money for the purpose of putting it into circulation as legal tender and anyone acquiring counterfeit money for himself or others with the selfsame end in view shall be subject to imprisonment for up to 12 years.

In case counterfeiting be performed in such a manner as to reduce the specific value of legal tender the penalty shall consist of imprisonment for up to 4 years.

That second paragraph is really remarkable. Banks cause inflation when they over-lend. And inflation reduces the value of legal tender.


IT'S AN INTERESTING LEGAL ARGUMENT, TO BE SURE...BUT TRY TO FIND STANDING IN A COURT...

[Demeter]

11. China is probably not really growing 7 million tons of asparagus every year Grace Dobush

http://qz.com/413634/china-is-probably-not-really-growing-7-million-tons-of-asparagus-every-year/

The Germans take their asparagus very seriously...It’s Spargelzeit (asparagus season) in Germany—the celebrated time from late April to June 24 when white asparagus (aka white gold, edible ivory, the king of vegetables) is everywhere. It grows white thanks to a horticultural technique called blanching, in which the stalks are hidden from the sun with dirt and never allowed to develop chlorophyll. Green asparagus is cheaper and not as ubiquitous. Huts selling white asparagus dot the northwestern European countryside, and basically every restaurant, from streetside cafés to the swankiest dining spots, offers asparagus specials. Michelin-starred Dutch restaurant De Zwann attempted its first asparagus delivery of the season by drone, a stunt that went down in flames...But despite asparagus’ celebrated status in Europe, the country producing the most of it is China, with Peru coming in second. According to the 2012 trade numbers, the most recent released by the UN Food and Agriculture Organization, China produced more than seven million tons of asparagus in 2012, but exported only a fraction of a percent of that.

Asparagus production in 2012 (metric tons)

Country____ Production__ Export Import
China_________7,350,000 ______4,543 192
Peru_______ 375,978 ____118,034 n/a
Mexico _____119,789 ____112,206 410
Germany _____102,395 ______4,340 26,409
United States_-_ 34,518 _____40,201 187,351
Netherlands_____ 15,700 19,128 15,253



So one wonders: How is that even possible, and what on god’s green earth is China doing with all that asparagus? Well, there’s more to the story. “The FAO figures are massively inflated,” says Loren Puette, director of ChinaAg, which tracks the country’s agriculture industry. (Regarding exports topping production numbers, he also notes that in some cases: “Some countries seemingly export more than they produce because those exports are actually re-exports. For example, the Netherlands imports a good from the USA and then re-exports the same good to a country like Germany.”)

A USDA report said China’s asparagus production was going to be 210,000 tons in 2010, and 240,000 in 2011. Puette says those numbers are much closer to the truth. He estimates that China’s asparagus production for 2014 was about 292,000 tons. “Even with the lowered production estimates, China is still a major asparagus producer.”

That puts Peru, which historically had no asparagus, at the top of the dirt pile. The US encouraged Peru to grow asparagus rather than cocaine in the 1990s, and it has become the third-most important export for Peru—its primary destination, the United States. China started allowing imports of asparagus from Peru in 2013 because of quality issues with local product, ChinaAg reported. “Fresh asparagus from the US and Peru are perceived within China as being of better quality,” Puette says—a status vegetable, if you will, in the wealthy cities of Shanghai and Hong Kong.

Asparagus is time-intensive to harvest, which gives countries with low labor costs a distinct advantage. China’s Shanxi province has a surplus of cheap farm labor, Puette notes, and much of the fresh product is sold cheap to processors who then export to countries where they can undercut local prices.

Germans, for what it’s worth, still highly value fresh, locally grown asparagus. Simon Schumacher, executive director of the Verband Süddeutscher Spargel- und Erdbeeranbauer e.V. (Southern Germany Association of Asparagus and Strawberry Growers), says the season started 10 days later than last year because of cool temperatures: “Prices were satisfactory. Yields are good. The quality is excellent.”

[Demeter]

12. Democrats recount labor's pressure tactics (TTP)

http://www.politico.com/story/2015/05/democrats-recount-labors-pressure-tactics-118305.html

The AFL-CIO was blunt in the call that went out to Rep. Scott Peters, a Democrat who represents San Diego: Vote yes on fast-track authority and the Trans-Pacific Partnership, people familiar with the conversation recall, and they’d spend a million dollars to knock him out in next year’s primary. If he managed to win, they’d drop another million against him in the general election.

The real fight over the trade agenda has always been in the House, and that’s where organized labor has been focusing for months. The aggressive effort has left even members who’ll be voting labor’s way bruised, and others who’ll be supporting President Barack Obama anxious enough that many won’t discuss their experiences publicly, instead dispatching staffers to speak on their behalf.

“They were very heavy-handed. And it was not appreciated. And it will not be forgotten,” said one Democratic staffer for a member who will be voting no on trade, as the unions want.

This staffer and other Democratic members and staffers who spoke under the condition of anonymity related a range of threats from local and national labor groups to pressure Democrats into opposing Obama.

Permanently cut off campaign donations. Pour money into opponents’ coffers instead. Run television ads. Launch protests of the type that have already stepped up this week, which include showing up in Sacramento, California, with giant prop Q-tips to urge Rep. Ami Bera, the latest announced supporter of Trade Promotion Authority, to “clean out his ears.” Take a pass at providing the organizing help Democrats rely on unions for in tight races. MORE

Read more: http://www.politico.com/story/2015/05/democrats-recount-labors-pressure-tactics-118305.html#ixzz3bUhrxVZf


MEAT AND POTATOES POLITICKING!

[Demeter]

13. PS: Do WEE have a plan?

I forget...if nothing turns up, do any of you have a request--desire--urge to take the weekend?

[Demeter]

14. how to reduce income inequality

http://lanekenworthy.net/2015/05/25/tim-smeeding-on-how-to-reduce-income-inequality/

1. Tax appreciated assets when inherited or transferred inter-vivos.
   
   
2. Raise income tax rates on capital income — capital gains and dividends — to levels just below labor, e.g. maximum rate at true current marginal tax rate or 30%. And curtail practices of defining earnings as capital income, e.g. “carried interest” provisions.
   
   
3. Reduce political rents: close tax loopholes that benefit mainly the wealthy (e.g. cap on deductions for employer-provided health insurance); turn deductions that benefit the richest into credits, many refundable, to benefit lower- and middle-income families; allow drug purchases at “best price” rates, not market rates, for Medicare; get rid of oil and gas exploration tax subsidies; limit and phase out agricultural subsidies.
   
   
4. Use tax revenue to improve public infrastructure (including internet).
   
   
5. Improve college prep classes and college counseling for students.
   
   
6. More and better apprenticeships (get employers involved).
   
   
7. Raise the minimum wage to $10 per hour, index it, and enforce labor laws (e.g. on scheduling).
   
   
8. Universal child allowance at $2,500 per child, refundable if this is more than income taxes owed, and separate from the EITC.
   
   
9. Profit sharing among all long-term (full year or more) employees.
   
   
   Timothy Smeeding is the Arts and Sciences Distinguished Professor of Public Affairs and Economics. He was Director of the Institute for Research on Poverty from 2008–2014. Professor Smeeding's publications include From Parents to Children, co-edited with John Ermicsch and Markus Jantti (Russell Sage Foundation, 2012); The Handbook of Economic Inequality, co-edited with Brian Nolan and Weimer Salverda (Oxford University Press, April 2009); Poor Kids in a Rich Country: America's Children in Comparative Perspective, co-authored with Lee Rainwater (Russell Sage Foundation, 2003); The Future of the Family, co-edited by Daniel Patrick Moynihan and Lee Rainwater (Russell Sage Foundation, 2004; paperback ed., 2006); The American Welfare State: Laggard or Leader? with Irv Garfinkel and Lee Rainwater (Oxford University Press, February 2010). In 2011 he published two edited volumes, Young Disadvantaged Men: Fathers, Families, Poverty, and Policy, with Irv Garfinkel and Ron Mincy (ANNALS Volume 635, May 2011), and Persistence, Privilege and Parenting: The Comparative Study of Intergenerational Mobility, with Robert Erikson and Markus Jantti (Russell Sage Foundation, 2011). His recent work has been on low-income men and their role as fathers; mobility across generations; and inequality of income consumption and wealth, and the measurement of poverty in a national and cross-national context.
   

[Demeter]

15. Julian Assange on the TPP: Secretive Deal Isn’t About Trade, But Corporate Control

http://www.democracynow.org/2015/5/27/julian_assange_on_the_trans_pacific

2nd of a 5-part video interview...see link

[Demeter]

16. Grexit, Brexit and the new “sharing”

http://failedevolution.blogspot.gr/2015/05/grexit-brexit-and-new-sharing.html

Take what you can and run: US and Russia anxious to take their European "rewards" in Cold War 2.0...If history indeed repeats itself, even "as farce", we could witness an altered version of what has been decided by the winners after the end of the WWII, and, right before the start of the Cold War 1.0...During the Yalta Conference, Franklin D. Roosevelt, Winston Churchill and Joseph Stalin effectively decided how they should shape their spheres of influence in Europe. They agreed, for example, that Greece would have to be included in the Western sphere of influence, while Bulgaria, in the Soviet one...Today, we may see a similar scenario during the ongoing global economic war. Some of the roles have changed. In today's multipolar world, Russia does not represent the Communist ideology, USA is not the superpower that it used to be, and Britain could only be in a position to choose camp rather than to be a global player, as it was in the past. The global neoliberal dictatorship, represented by the biggest corporate and banking cartels, will do anything to prevent a disastrous Brexit, or, Grexit scenario because they are trying to build a new world order through the dissolution of nation-states, to secure their interests in the era of technological and financial globalization. However, their basic tools, like the ECB and the IMF, are making big mistakes due to their anxiety to impose the most catastrophic neoliberal policies, especially in the eurozone. They managed to wake up anti-European emotions in many countries. Day by day, more Europeans discover the image of a repulsive Europe.

It is remarkable that Cameron was showing Greece to the voters, in pre-election speeches, as an example of what the European "empire" could do to Britain, and promised a referendum for the people to decide whether Britain should stay in the EU. Yet, ideologically he is actually identical to the ruling political class in Brussels and Berlin. His government is about to destroy what was left from the social state in Britain and implement the most cruel austerity policies. Cameron will probably be forced to retreat on his promise to Britons under the pressure of the global elites (maggies-ghost-returns-to-britain) but under these circumstances, an "accident" for their plans would not be impossible to happen. According to an alternative scenario, both Brexit and Grexit become a fact.

As Britain senses that it lost its role in the German-dominated European empire, it would be happy to leave and return permanently to its "physical" ally, the US. The relations between the US and Germany are probably in the worst position after decades (us-cuts-spying-cooperation-with-germany , who-is-considered-ostensible-ally-by-us), and the US are also unhappy with the German domination in the economic level because it sets in danger a unified Europe who serves their interests. In case they could not prevent Brexit, they will compromise with what they can take: an old, traditional and faithful ally in the new Cold War, maintaining much of their military presence in Europe.

On the other hand, the German political elite and the eurocrats play with fire, as they blackmail the economically devastated Greece, insisting on the same neoliberal policies that ruined the country. Greece may be forced to escape the eurozone prison and return to national currency in order to survive. The Russians will not waste the chance. They will offer an alternative through BRICS (evolving-fast-greece-closer-to-brics), and grab the opportunity for geopolitical expansion in the East Mediterranean, mainly through the game of the pipelines (fresh-smart-moves-by-putin-in). The Russians already "put foot" in the East Mediterranean (mission-accomplished-russians-put-foot), while recently, the Russian together with the Chinese fleet made a power demonstration during common drills in Mediterranean (china-russia-drill-in-mediterranean). In case of Grexit, Greece could slip towards the Sino-Russian sphere of influence.

In the middle of all this situation, Germany could see Europe torn apart. The Germans make the same mistake again and again. They tried to prevail through an economic war this time, using their economic superiority. Obviously, they underestimated the new conditions in the global multipolar world and became overconfident on their power for one more time. The new "sharing" of Europe, in case of Grexit/Brexit, will be quite different this time. It will not come after an agreement between superpowers, as it happened in 1945. It will rather come in terms of "take what you can and run". Moreover, it will not come after the end of a world war. It will come in the middle of an economic war and a new cold war. All these facts, make the "sharing" process much more dangerous.


SEE ARTICLE FOR LINKS (THE STUFF IN PARENTHESES)

[Demeter]

17. Fossil industry faces a perfect political and technological storm

http://www.telegraph.co.uk/finance/economics/11633745/Fossil-industry-faces-a-perfect-political-and-technological-storm.html

The political noose is tightening on the global fossil fuel industry. It is a fair bet that world leaders will agree this year to impose a draconian “tax” on carbon emissions that entirely changes the financial calculus for coal, oil, and gas, and may ultimately devalue much of their asset base to zero.

The International Monetary Fund has let off the first thunder-clap. An astonishing report - blandly titled "How Large Are Global Energy Subsidies" - alleges that the fossil nexus enjoys hidden support worth 6.5pc of world GDP.

This will amount to $5.7 trillion in 2015, mostly due to environmental costs and damage to health, and mostly stemming from coal. The World Health Organisation - also on cue - has sharply revised up its estimates of early deaths from fine particulates and sulphur dioxide from coal plants.

The killer point is that this architecture of subsidy is a "drag on economic growth" as well as being a transfer from poor to rich. It pushes up tax rates and crowds out more productive investment. The world would be richer - and more dynamic - if the burning of fossils was priced properly....


BUT WILL IT BE DONE WITH Liberté, égalité, fraternité? oR EVEN, LEGALITE?

[Demeter]

18. When is a Felony Not a Felony? When You’re a Bank!

https://medium.com/bull-market/when-is-a-felony-not-a-felony-when-you-re-a-bank-232a5371d7c1

Good news, America: We can now get guilty pleas from banks!

Bad news, America: That’s only because guilty pleas from banks are now absolutely meaningless.

Last week, JP Morgan, Citigroup, Barclays, and Royal Bank of Scotland pled guilty to felony charges of conspiring to manipulate currency prices, and UBS pled guilty to manipulating benchmark interest rates. Regulators and prosecutors found the misconduct because the traders left extensive, written tracks — in chatrooms called “The Cartel” and “The Mafia.” James Kwak wrote that Stringer Bell from the popular television series The Wire would never have tolerated the brazen, “amateurish behavior” these traders exhibited. But why should traders bother to cover their tracks, when they know they have the absolute best clean-up crew in the business — the financial regulators and law enforcement meant to police them?

When an individual is convicted of a felony, they face years of disenfranchisement — from being denied the right to vote in many states, to facing barriers to finding work, felony convictions have real-world consequences for people. But when it comes to banks, regulators and law enforcement work together to ensure collateral consequences don’t occur.

It’s not supposed to be that way. When a bank is charged with a crime, there are certain penalties that automatically kick in. Here is what the banks were facing as a result of their felonies:

Disqualification from managing mutual funds and exchange-traded funds for RBS, JP Morgan, Citigroup and UBS.
New barriers for issuing securities. All the convicted banks are “well-known seasoned issuers,” which is a special status that lets them quickly raise capital without having to get SEC approval first. A criminal conviction automatically disqualifies a bank from this status.
No more immunity for earnings projections. Since you can’t verify the accuracy of the future, the law gives companies a “safe harbor” that allows them to make forward-looking statements anyway — without fear of lawsuits. The felony pleas would disqualify UBS, Barclays and JP Morgan from this immunity, thus subjecting all of their statements to the normal liability standards for fraud.
UBS and Barclays could no longer raise unlimited amounts of money though the sale of private securities.

How many of these consequences do you think the banks actually faced? If you guessed ZERO out of four, you are correct! The Securities and Exchange Commission waived all of the above punishments. And according to Reuters, banks demanded assurance they’d get these waivers before they agreed to plead guilty to the felonies. It’s not enough that the banks are avoiding prison — they needed a guarantee they wouldn’t see the regulatory equivalent of probation, either....

[Demeter]

19. IRS data theft: 5 things you need to know

http://www.marketwatch.com/story/irs-data-theft-5-things-you-need-to-know-2015-05-27

Be wary of unsolicited email and phone calls related to the breach

...For years, the IRS has been struggling to keep tax refunds out of the hands of crooks, especially as online tax filing became common. It gave criminals who filed fraudulent refunds an estimated $5.8 billion in 2013, according to the U.S. Government Accountability Office. Earlier this month, the IRS set up a new cybercrime unit to fend off hackers. And after inadvertently giving out millions of dollars to prisoners who sent in fake filings while behind bars , the agency in 2013 began sharing more information with federal and state prisons to better match records.

This scenario, unlike the typical breach of a website or hack into a database, shows how criminals can harvest information from the growing market for stolen personal data and leverage it for financial gain in other contexts.

Here’s what taxpayers should know:

1. The IRS will send you a letter if your records were at risk.

2. The IRS will offer you free credit monitoring, but that is in no way a catch-all

3. The IRS already knew it needed to do a better job at securing taxpayer data.

4. Personal identity-verification questions are a poor security practice.

5. Your information isn’t much safer with the government.

DETAILS AT LINK

[Demeter]

20. Dick Fuld, Disgraced Former CEO Of Lehman Brothers, Makes Bizarre Comeback

http://www.huffingtonpost.com/2015/05/28/dick-fuld-lehman_n_7462196.html?utm_hp_ref=business&ir=Business

Dick Fuld, part villain and part unforgivably very confused bystander to the financial crisis in the eyes of most -- and a victim of the financial crisis to himself -- made a bizarre comeback at a conference in midtown New York hotel on Thursday.

In his first public appearance (other than sworn congressional testimony) since the collapse of Lehman Brothers, Fuld blamed regulators, borrowers and rumors for the end of the 158-year-old, $47 billion firm he led. It was a “perfect storm” that sank Lehman, not his own leadership or decisions, Fuld said, while touting Lehman’s “success” to the audience. He also claimed that every one of the 27,000 employees who once worked for Lehman had been a risk manager, because they owned stock in the firm.

Lehman’s September 2008 collapse was the first of many bank failures and market seizures that fall. It sparked the financial crisis that ended in a $416 billion bank bailout and left the country mired in the Great Recession.

Fuld's comments were initially carried live on the financial news network CNBC, but the feed was pulled by conference organizers part way through his remarks. Technically, Fuld was at the Marcum Microcap conference to deliver a keynote address titled, "How Emerging Growth Companies Can Succeed in Today's Capital Markets: Perspectives from My Journey." His comments, however, were a well-rehearsed if less-than-convincing defense of his own actions leading up to the largest bankruptcy in U.S. history.

He denied that Lehman was a failed company in September 2008 and intimated that he and the firm were victims of a conspiracy centered around former competitors in regulatory positions with a vendetta against him. Fuld, nicknamed the “Gorilla” during his career for his overly aggressive style, seemed temperamentally unchanged, telling one conference questioner, “Why don’t you bite me?”

Months prior to Lehman’s fall, Fuld had declared that “the worst of the impact of the financial markets is behind us” and pushed subordinates to take more risk, sidelining or firing those who disagreed with him.

Fuld is now working at his own firm, Matrix Advisors, which is focused on the kind of small deals he would have scoffed at as CEO of a massive investment bank. The venue itself was an indication of his fall: an otherwise barely noteworthy conference focused on selling shares in tiny public companies.

I WONDER IF HE HANDS OUT BLUE PILLS, OR RED ONES?

[Demeter]

22. Dick Fuld Continues to Exhibit Advanced Case of Wall Street CEO Derangement Syndrome

http://www.nakedcapitalism.com/2015/05/dick-fuld-continues-to-exhibit-advanced-case-of-wall-street-ceo-derangement-syndrome.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



Posted on May 29, 2015 by Yves Smith

If you read the financial press, it’s hard not to notice that virtually all the CEOs of major financial firms are delusional. If you take their words at face value, as opposed to posturing, they believe their misrule had nothing to do with the financial crisis, that the fact that their firms survived was due to their inspired leadership and the plucky actions of their staff, as opposed to massive rescue operations by the Fed and Treasury, and that regulation is a denial of their God-given right to make a buck any way they see fit. Despite the fact that many of their remarks range from cringe-making to preposterous doesn’t stop them. Indeed, the ones who have the self-awareness to recognize that this line of patter is pure PR no doubt also know that Big Lies work due to dint of repetition, and not their relationship to observable reality.

However, it appears that having the financial crisis analogue to the captain of the Titanic carry on in the stereotypical super-entitled Wall Street CEO manner was too much for the tender sensibilities of CNBC. The news network seems to have realized that having former Lehman CEO Dick Fuld say that the firm’s failure was due to anything but him risked calling into question the veracity of other big financial firms CEOs blaming the tsuris they experienced on forces of nature. Get a load of what happened when Fuld made his first public appearance that was not for the purpose of providing testimony since Lehman collapsed. From Huffington Post:

Dick Fuld, part villain and part unforgivably very confused bystander to the financial crisis in the eyes of most — and a victim of the financial crisis to himself — made a bizarre comeback at a conference in New York on Thursday…..

Fuld blamed regulators, borrowers and rumors for the end of the 158-year-old, $47 billion firm he led. It was a “perfect storm” that sank Lehman, not his own leadership or decisions, Fuld said, while touting Lehman’s “success” to the audience. He also claimed that every one of the 27,000 employees who once worked for Lehman had been a risk manager, because they owned stock in the firm…

Fuld’s comments were initially carried live on the financial news network CNBC, but the feed was pulled by conference organizers part way through his remarks. Technically, Fuld was at the conference to deliver a keynote address titled, “How Emerging Growth Companies Can Succeed in Today’s Capital Markets: Perspectives from My Journey.” His comments, however, were a well-rehearsed if less-than-convincing defense of his own actions leading up to the largest bankruptcy in U.S. history.

He denied that Lehman was a failed company in September 2008 and intimated that he and the firm were victims of a conspiracy centered around former competitors in regulatory positions with a vendetta against him. Fuld, nicknamed the “Gorilla” during his career for his overly aggressive style, seemed temperamentally unchanged, telling one conference questioner, “Why don’t you bite me?”

Author Ben Walsh reminds us that Fuld thought the worst of the financial upheaval was over in 2008 and pushed employees to take more risk, marginalizing or firing any who questioned him.

But it’s even worse than that. Lehman had been in a strategically precarious position for decades: a subscale firm desperately in catch-up mode with the leaders. That’s one big reason why Bear and Lehman both were overweight real estate operations. They desperately needed to be more profitable than industry leaders like Goldman, an impossibly order, so they could increase their capital bases faster and increase their market position.

Given how tough the top firms were, the only route available was to focus on the riskiest businesses, which also offered the highest potential returns and hope for the best. Lehman almost failed in the 1997-1998 Asian crisis. And despite Fuld’s self-serving blather, Lehman was so not viable in its current configuration that Fuld was seeking suitors in 2008. But as Andrew Ross Sorkin’s Too Big to Fail recounts, Fuld was so inept and presumptuous that he drove interested parties away. Lehman still had one serious deep-pockets possible rescuer, the Korean Development Bank, but they were up for only an investment in a “good bank”; the rancid real estate operations would need to be hived off and liquidated. The head of investment banking was in advanced negotiations in Korea when Fuld, uninvited, walked into the meeting and scuppered the good bank/bad bank deal. And the interest was real: the head of the Korean Development Bank, after Lehman failed, said he really wanted to consummate the transaction. And there are plenty of other proofs of what a goner Lehman was, the most obvious being its use of the accounting dodge of Repo 105, which it was using to move $50 billion of dodgy assets off its balance sheet at quarter end.

But Fuld’s narrative is different in degree, but not in kind, from that of Jamie Dimon, Standard Chartered’s now ex CEO Peter Sands, and “doing God’s work” Blankfein. And too many other Wall Street denizens seem to think it’s perfectly normal to not only put their uncensored id on display but to have their insatiable desires seen as legitimate. So while CNBC’s evident censorship arguably shows that the financial services industry has a smidge of self-awareness, it looks more like an exception that proves the rule.

[Demeter]

21. Bank of America CEO Still Grappling With Financial Crisis Fallout

http://www.thestreet.com/story/13164764/1/bank-of-america-ceo-still-grappling-with-financial-crisis-fallout.html?puc=yahoo&cm_ven=YAHOO

Dealing with the past still weighs heavily on Bank of America (BAC - Get Report) CEO Brian Moynihan's mind...Among the first speakers at Bernstein's Annual Strategic Decisions Conference, Moynihan focused heavily on the changing interest-rate environment, operating in an era of increased regulation, and what's next for the bank. The 31-year-old conference, held at New York's Waldorf Astoria, offers investors and analysts a chance to hear from an array of Fortune 500 companies, from Bank of America to Yum Brands, McDonald's and JPMorgan Chase.

While Moynihan focused on the future, his remarks made clear that the 2008 crisis continues to weigh on the Charlotte, N.C.-based banking giant. Like its rivals, Bank of America is anxious for the Federal Reserve to begin raising interest rates, which were slashed to around zero during the crisis. While anyone with a savings account knows the pain of near-bottom deposit rates, as Moynihan pointed out, the interest banks can charge on loans is also suppressed. Widening the spread between interest charged on loans and interest paid on deposits -- also known as net interest margin -- would benefit the bank immensely. The figure is an industry benchmark for the profitability of a bank's lending operations. As of the end of 2014, Bank of America's net interest margin was 2.1%.

Compounding the issue of narrowing interest-margin spreads is that the banks have had to adhere to tighter lending standards and capital requirements following the crisis, which necessitated government bailouts and wiped out trillions of dollars in market value.

POOR BABIES! LET'S SEND THEM SOME RELIEF!--DEMETER

As Moynihan sees it, capital is divided into three buckets: capital companies can put to work; capital buffers, which are under new mandates; and capital companies pay out. Because banks have higher capital requirements, they have less money to put to work in the form of loans. As Moynihan tells it, the bank's challenge is, "Can you keep your nose clean and still give access to credit?"

Adding to Bank of America's regulatory issues, the company must submit a new capital plan to the Federal Reserve by September to address weaknesses identified in stress tests. As the bank completes this "discrete task," Moynihan said he wants to make sure that it emerges as best in its class in future testing.

Inherent in much of Moynihan's talk was the idea that, even though the bank has made progress, it is still weighed down by the past. Bank of America continues to wind down its legacy asset servicing division, launched in 2011 to service defaulted loans and mortgages, many of which were acquired through Bank of America's purchase of subprime lender Countrywide in 2008. Moynihan acknowledged that some of the quantitative and qualitative costs in that division arise from the customers being in an unpleasant situation. As such, managing that division requires " a lot of work, a lot of people, and a lot of care."

Progress can be difficult when the past hasn't been fully dealt with.