Tag Archives: Wall Street

Stephen Lendman ~ Corporate America Loves Jason Furman

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SteveLendmanBlog June 17 2013

Jason Furman

Key Obama officials comprise a virtual rogues gallery of scoundrels. On June 10, he nominated Jason Furman to replace Alan Krueger. He’ll serve as White House Council of Economic Advisors chairman.

He was Clinton’s Special Assistant to the President for Economic Policy at the National Economic Council. He began advising Obama in 2008.

Since January 2009, he’s been Obama’s National Economic Council deputy director. His nomination requires congressional approval. More on him below.

Krueger’s returning to Princeton. He’s Professor of Economics and Public Affairs. He compromised his integrity in Washington. Prior to becoming CEA head, he was Obama’s Assistant Treasury Secretary for Economic Policy.

He and other Obama economic officials hail economic recovery. They do so duplicitously. They’ve done so throughout protracted Main Street Depression conditions. They willfully turned a blind eye.

They endorse corporate friendly policies. They spurn popular ones. Real unemployment’s 23%. Monthly jobs reports are phony. Fantasy best describes them.

Good jobs are vanishing in plain sight. Low pay mostly service employment replaces them. Thirdworldizing America is policy. A race to the bottom continues. Krueger substituted dissembling for truth and full disclosure. It’s part of the package he accepted.

Perhaps his Princeton students fare no better. They’d be wise to make better choices. He’s returning for the fall semester. Obama called him “the driving force behind many of the economic policies that I have proposed that will grow our economy and create middle class jobs.”

Obama’s done more to wreck America’s economy than any US president in history. As key Treasury official and CEA head, Krueger helped craft some of his worst policies.

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Pam Martens ~ The Consumer Has The Power To Fight Back Against Wall Street

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Wall Street On Parade June 17 2013

A study conducted by Edward N. Wolff for the Levy Economics Institute of Bard College in March 2010 made the following findings:

The richest 1 percent received over one-third of the total gain in marketable wealth over the period from 1983 to 2007. The next 4 percent also received about a third of the total gain and the next 15 percent about a fifth, so that the top quintile collectively accounted for 89 percent of the total growth in wealth, while the bottom 80 percent accounted for 11 percent.

Debt was the most evenly distributed component of household wealth, with the bottom 90 percent of households responsible for 73 percent of total indebtedness.

Wealth concentration in too few hands while the general populace is saddled with too much debt to buy the goods and services produced by the corporations, is a replay of the conditions leading to the crash of 1929 and the ensuing Great Depression.

Writing in his book, “The Worldly Philosophers,” Robert Heilbroner explained the situation leading up to the depression of the 1930s:

“The national flood of income was indubitably imposing in its bulk, but when one followed its course into its millions of terminal rivulets, it was apparent that the nation as a whole benefited very unevenly from its flow. Some 24,000 families at the apex of the social pyramid received a stream of income three times as large as 6 million families squashed at the bottom — the average income of the fortunate families was 630 times the average income of the families at the base…And then there was the fact that the average American had used his prosperity in a suicidal way; he had mortgaged himself up to his neck, had extended his resources dangerously under the temptation of installment buying, and then had ensured his fate by eagerly buying fantastic quantities of stock – some 300 million shares, it is estimated – not outright, but on margin, that is, on borrowed money.”

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Bob Adelmann ~ Central Banks’ Bubble Bursting, Sending Markets Down Worldwide

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The New American June 13 2013

When the Japanese stock market lost more than six percent of its value on Wednesday in a massive sell-off, pundits jumped on the move to try to explain what happened, and what it all means. Evan Lucas, a market strategist at IG Markets, wrote:

The storm clouds are building: the Dow has just suffered its first three-day losing streak for the year, the Chicago VIX [fear] index has climbed further; Europe is sliding off its highs; China is slowing down faster than expected, and the BOJ [Bank of Japan] is holding [off] on additional stimulus action.

Hans Goetti, chief investment officer at Finaport, explained why:

We’ve been living in an environment where economically speaking, bad news was good news because bad news meant more monetary stimulus. The rally that we have had over the past one-and-a-half years has been mainly driven by central banks and now the punch bowl is about to be taken away.

Two analogies are often used to describe the actions of the Federal Reserve in the United States as well as other central banks around the world: the punch bowl, and the drug addict. Each is helpful in explaining the addictive nature of easy money (or alcohol or drugs) and the inevitable withdrawal that takes place when the stimulus is removed.

According to Austrian school business cycle theory these declines in markets are the inevitable consequences of an expanding money supply, sold as the answer to fighting a recession. Low interest rates, Keynesians believe, help to stimulate borrowing and investment which works to reverse the economic downtrend and get things moving again. There are numerous flaws in this theory, including not knowing just how much new money needs to be printed, or when to stop. The problem is simple: Central bankers don’t know the answer to either question and as a result are unprepared for the consequences, or even to recognize them while they are occurring.

What’s being reported are those consequences. On Wednesday, the Dow Jones Industrial Average (DJIA) rose by more than 100 points early in the day, reversed course and dropped 260 points, ending the day down 126 points, capping its first three-day losing streak in 2013. Similar losses were recorded by the S&P 500 Index and the Nasdaq, while the “fear index” (the CBOE Volatility Index) spiked over 18 (five points above where it usually trades).

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Matt Taibbi ~ Everything Is Rigged, Vol. 9,713: This Time, It’s Currencies

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RollingStone June 13 2013

I’ll get into this in more detail later (I’m on deadline for a magazine feature), but this story just landed. Given the LIBOR story, the Interest Rate Swap manipulation story, the Euro gas price manipulation story, the U.S. energy price manipulation story, and (by now) countless others of the “Everything is Rigged” variety, this screams out for immediate notice. Via Bloomberg:

Traders at some of the world’s biggest banks manipulated benchmark foreign-exchange rates used to set the value of trillions of dollars of investments, according to five dealers with knowledge of the practice . . .

Employees have been front-running client orders and rigging WM/Reuters rates by pushing through trades before and during the 60-second windows when the benchmarks are set, said the current and former traders, who requested anonymity because the practice is controversial. Dealers colluded with counterparts to boost chances of moving the rates, said two of the people, who worked in the industry for a total of more than 20 years.

This time the rates allegedly being rigged are in the foreign-exchange or “FX” markets, meaning that if this story is true, it would almost certainly trump LIBOR for scale/horribleness.

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Steven Lendman ~ Whistleblowing: Exemplary Patriotism

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SteveLendman’s blog June 11 2013

Whistleblowing reflects doing the right thing. It exposes wrongdoing. It does so because it matters.

Edward Joseph Snowden follows a noble tradition. Others before him established it. Daniel Ellsberg called his NSA leak the most important in US history. More on him below.

Expressions of patriotism can reflect good or ill. Samuel Johnson said it’s the last refuge of a scoundrel. Thomas Paine called dissent its highest form. So did Howard Zinn.

According to Machiavelli:

“When the safety of one’s country wholly depends on the decision to be taken, no attention should be paid either to justice or injustice, to kindness or cruelty, or to its being praiseworthy or ignominious.”

Tolstoy said:

“In our day the feeling of patriotism is an unnatural, irrational, and harmful feeling, and a cause of a great part of the ills from which mankind is suffering; and…consequently, this feeling should not be cultivated, as is now being done, but should, on the contrary, be suppressed and eradicated by all means available to rational men.”

Philosophy Professor Stephen Nathanson believes patriotism involves:

  • special affection for one’s own country;
  • a sense of personal identification with the country;
  • special concern for the well-being of the country; and
  • willingness to sacrifice to promote the country’s good.

Socrates once said:

“Patriotism does not require one to agree with everything that his country does, and would actually promote analytical questioning in a quest to make the country the best it possibly can be.”

The best involves strict adherence to the highest legal, ethical and moral standards. Upholding universal civil and human rights is fundamental. So is government of, by and for everyone equitably. Openness, accountability and candor can’t be compromised.

When governments ill-serve, exposing wrongdoing is vital. It takes courage to do so. It involves sacrificing for the greater good. It includes risking personal harm and welfare. It means doing what’s right because it matters. It reflects patriotism’s highest form.

Daniel Ellsberg, Bradley Manning and Julian Assange are best known. So is Mordechai Vanunu. More on him below. Few remember Peter Buxtun. He’s a former US Public Health Service employee.

He exposed the Tuskegee syphilis experiment. About 200 Black men were infected. It was done to watch their progression. They were left to die untreated. Whistleblowing stopped further harm.

A. Ernest Fitzgerald held senior government positions. In 1968, he exposed a $2.3 billion Lockheed C-5 cost overrun. At issue was fraud and grand theft. Nixon told aides to “get rid of that son of a bitch.”

Defense Secretary Melvin Laird fired him. Fitzgerald was a driving force for whistleblower protections. He fought for decades against fraud, waste and abuse. He helped get the 1978 Civil Reform Act and 1989 Whistleblower Protection Act enacted.

Gregory Minor, Richard Hubbard and Dale Bridenbaugh are called the GE three. They revealed nuclear safety concerns. So did Arnold Gundersen, David Lochbaum and others. At issue then and now is public safety over profits.

Mordechai Vanunu was an Israeli nuclear technician. He exposed Israel’s secret nuclear weapons program. He paid dearly for doing so.

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Pam Martens ~ NYU Channels Wall Street: New Documents Show Lavish Pay, Perks And Secret Deals

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Wall Street On Parade June 10 2013

NYU Provided a $2.85 Million Mortgage to a Law Professor to Buy a 6 Room, 3 1/2 Bath Condo In This Building

According to documents unearthed in a month-long search of public records, NYU Law School has created an array of nonprofits to funnel money into lavish perks for its professors. The money has been used by professors to buy multi-million dollar brownstones and condos in Manhattan and Brooklyn with portions of some loans forgiven over time. In some cases, even the interest charged on the loans has been reimbursed.

The decision to use nonprofit funds to enhance the lifestyles of a select handful of professors and administrators rather than assisting students is under investigation by Senator Chuck Grassley at the Senate’s Judiciary Committee. A referral has also been made by the NYU chapter of the American Association of University Professors to the New York State Attorney General’s Charities Bureau which oversees nonprofit organizations.

From the hundreds of records examined, NYU, under the leadership of President John Sexton, looks like a real estate developer in drag as a university. According to its federal tax returns from 2006 through 2010 – just a five year period, its five highest paid independent contractors received over $568 million for construction work and an eye-popping $173 million to clean its buildings.

Last year, Newsweek magazine ranked NYU as the fourth least affordable university in the country with an annual on-campus cost of $58,858.

Sitting in close geographic proximity to the rapacious denizens of Wall Street, with a Board sprinkled with the chummy financial titans and chaired by their go-to legal counsel, Martin Lipton, it seemed only a matter of time before NYU would succumb to Wall Street’s brand of  crony capitalism as a business model.

NYU has also adopted the Wall Street catchphrase, globalism, with NYU campuses spreading to Abu Dhabi and Shanghai and international academic centers springing up in far flung locales like Buenos Aires, Prague and Tel Aviv.

In 2004, the NYU School of Law Foundation informed the IRS on its annual tax filing that its primary purpose which garnered it tax exempt status was to foster legal education and research “by awarding scholarships, making grants for educational purposes related to law, and supporting programs of the School of Law.”

But on December 9, 2004, the NYU School of Law Foundation made a $2,850,000 mortgage loan to one of its law professors, Richard (Rick) Pildes to purchase a 6 room, 3 ½ bath, luxury condo with views of the Hudson River.

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Pam Martens ~ U.S. Manufacturing Shrinks In May, Reviving Fed Chair Bernanke’s Deflation Worries

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Wall Street On Parade June 4 2013

The Institute for Supply Management’s (ISM) manufacturing index contracted in May to a reading of 49, the lowest level since it registered a reading of 45.8 percent in June 2009. A reading below 50 means the manufacturing sector is contracting.

The data, called the PMI or Purchasing Managers’ Index, is based on a survey of more than 300 purchasing and supply executives from around the country who respond anonymously to a monthly questionnaire. With the exception of a four-year interruption during World War II, ISM has published the data monthly since 1931.

Both the index and a number of its individual components showed broad-based weakness in May. ISM’s new order index registered 48.8 percent in May, a decrease of 3.5 percentage points when compared to the April reading of 52.3 percent. The Backlog of Orders Index registered 48 percent, a 5 percent drop from the 53 percent reported in April. The New Export Orders Index registered 51 percent in May, which is 3 percentage points lower than the 54 percent reported in April.

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Michael Snyder ~ Obama’s Super Secret Treaty Which Will Push The Deindustrialization Of America Into Overdrive

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Economic Collapse blog June 3 2013

Did you know that Barack Obama has been secretly negotiating the most important trade agreement since the formation of the World Trade Organization?  Did you know that this agreement will impose very strict Internet copyright rules, ban all “Buy American” laws, give Wall Street banks much more freedom to trade risky derivatives and force even more domestic manufacturing offshore?  If you have not heard about this treaty, don’t feel bad.  Obama has refused to even give Congress a copy of the draft agreement and he has banned members of Congress from attending the negotiations.  The plan is to keep this treaty secret until the very last minute and then to railroad it through Congress and have it signed into law by October.  The treaty is known as “the Trans-Pacific Partnership”, and the nations that are reported to be involved in the development of this treaty include the United States, Canada, Japan, South Korea, Australia, New Zealand, Chile, Peru, Brunei, Singapore, Vietnam and Malaysia.  Opponents of this treaty refer to it as “the NAFTA of the Pacific”, and if it is enacted it will push the deindustrialization of America into overdrive.

The “one world” economic agenda that Barack Obama has been pushing is absolutely killing the U.S. economy.  As you will see later in this article, we are losing jobs and businesses at an astounding pace.  And each new “free trade” agreement makes things even worse.

For example, just check out the impact that the recent free trade agreement that Obama negotiated with South Korea is having on us…

  • A 10 percent decline of U.S. exports to Korea
  • The U.S. trade deficit with Korea has climbed 37 percent
  • U.S. auto industry has been crippled
  • Loss of U.S. control where international trade, banking and finance is concerned
  • A projected 159,000 jobs will be lost

Wait a second – I though that “free trade” agreements were actually supposed to increase exports.

So why have they declined by 10 percent?

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Pam Martens ~ Margin Debt on Wall Street Hits All Time High: But Whose Debt Is It?

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Wall Street On Parade June 3 2013

Wall Street Bull Statue in Lower Manhattan

The New York Stock Exchange has released data showing that the amount of borrowing against assets held in brokerage accounts as of April 30, 2013 has reached an all time record. Called margin loans, investors have borrowed $384 billion against their accounts, topping the prior record of $381.4 billion in margin debt set in July 2007 – just before the onset of the financial crisis.

The ramp up in margin debt has been occurring at a steady pace. It stood at $284.6 billion in June 2012; $330 billion at the end of December 2012; and has risen each month since then to reach $384 billion at the end of April 2013, according to the most recent data listed at the New York Stock Exchange.

But just who is it that is taking out of all these risky loans? If it’s the small, retail investor, that should set off alarm bells in Washington.

In January, a study by Morgan Stanley showed that hedge funds’ holdings versus the cash provided to them by investors stood at 153 percent versus 143 percent in early 2011.

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Jon Rappoport ~ 150 Million Americans Go To Mexico, Swim Back, Become Instant Millionaires

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www.nomorefakenews.com May 31 2013

This is satire, folks! Enjoy ~G

FOX News: “Illegal immigrant mother of seven given food stamps, meds, housing, and Social Security—for 20 years.”

Bob and Sally Craft have written a book. Overnight, it’s leaped to the top of the New York Times best-seller list: The Key to Wealth: Swimming Lessons.

In 2012, Bob and Sally, who were living in Toledo, made a bold move. They hitchhiked to Texas, crossed the border into Mexico, swam back across the Rio Grande, and applied for federal benefits.

“Little did we know how rich we’d become,” Sally said. “Our government counselor told us we were suddenly eligible for $700 a month and free housing. For the rest of our lives.”

But that was just the beginning of the story.

Bob, who was an out-of-work accountant, after serving two years in prison on a fraud charge, “ran some numbers.”

“You see,” Bob said, “sitting there across from our federal-aid counselor, still dripping wet from our swim back into the US, I realized she was talking about giving Sally and me roughly five million dollars over the course of our lives.”

Bob proposed an alternative payout plan.

Francine Baggit, their counselor, was amazed as she listened. “Bob explained that if we paid them the whole sum at once, they could invest it. I personally wrote a letter to the president, and two weeks later I almost fell off my chair when he called me at home.”

The president, through Press Secretary Ray Blarney, released an historic statement yesterday. “We now can assure help to those who need it,” Blarney said. “Essentially, welfare can be moved over into a new system. Lifetime pay-outs in one lump sum. Investment accounts.”

This triggered a mass exodus, temporary to be sure, from the US into Mexico. At last count, the Department of Homeland Security, who is supervising what they’re calling ‘Operation Red Sea,’ estimates that 150 million Americans are making their way to the Mexican border in Texas, California, Arizona, and New Mexico.

“We’re trying to keep this orderly,” stated Janet Neoconitan. “It’s turning into a full-time job. The swim and dash back into the US is fraught with logistical problems.”

According to CIA spokesman Frank Earnest, the unwritten agreement with the Mexican Sinaloa cartel “is being reworked on the fly.”

Earnest explained that 150 million Americans will certainly clog up the prescribed routes for importation of heroin and cocaine into the US.

“Up until now,” Earnest said, “Sinaloa and the US government had neatly marked out crossing points for drugs, and then clean paths for eighteen-wheelers into Los Angeles and Chicago. But we’re in a chaotic situation all of a sudden.”

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Pam Martens ~ The Next Financial Crisis: Junk Bonds

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Wall Street On Parade May 31 2013

Ignore this past week’s trading in the junk bond market at your own peril.

On May 7 and May 8 of this year, junk bonds fell to record low yields of 4.97 and 4.96 percent, respectively, according to the Barclays U.S. Corporate High Yield Index. (Wall Street prefers the misleading title of “High Yield” to peddle its junk bond wares.) Back in 2008, junk bond yields were trading as high as 19 percent. (Junk bonds are those rated below Baa3 by Moody’s and below BBB- by Standard & Poor’s.)

In the last two weeks, junk bond prices have been selling off as everyone from small investors, pension funds, insurance companies and mutual fund portfolio managers reassess the amount of bond support that will be coming from the Federal Reserve in the future. While prices of Treasury bonds and investment grade corporate bonds have also sold off, there has been a notable deterioration in the junk bond area, with a particularly sharp sell off earlier this week.

According to Lipper, there was a massive net outflow of $880 million for the 7-day period ending May 29 from mutual funds and ETFs (exchange-traded funds) invested in junk bonds.

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Matt Taibbi ~ Why Didn’t the SEC Catch Madoff? It Might Have Been Policy Not To

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RollingStone May 31 2013

More and more embarrassing stories of keep leaking out the SEC, which is beginning to look somehow worse than corrupt – it’s hard to find the right language exactly, but “aggressively clueless” comes pretty close to summing up the atmosphere that seems to be ruling the country’s top financial gendarmes.

The most recent contribution to the broadening canvas of dysfunction and incompetence surrounding the SEC is a whistleblower complaint filed by 56-year-old Kathleen Furey, a senior lawyer who worked in the New York Regional Office (NYRO), the agency outpost with direct jurisdiction over Wall Street.

Furey’s complaint is full of startling revelations about the SEC, but the most amazing of them is that Furey and the other 20-odd lawyers who worked in her unit at the NYRO were actually barred by a superior from bringing cases under two of the four main securities laws governing Wall Street, the Investment Advisors Act of 1940 and the Investment Company Act of 1940.

According to Furey, her group at the SEC’s New York office, from a period stretching for over half a decade through December, 2008, did not as a matter of policy pursue cases against investment managers like Bernie Madoff. Furey says she was told flatly by her boss, Assistant Regional Director George Stepaniuk, that “We do not do IM cases.”

Some background is necessary to explain the significance of this tale.

There are four main laws that the SEC uses to regulate the financial sector. At least as far as numbers go, the agency has a fairly extensive record of enforcement actions with the first two, which are aimed at the securities markets.

The first of those is the Securities Act of 1933, also commonly known as the “Blue Sky laws,” which among other things set down the rules mandating public disclosure of pertinent information to investors in securities. The second is the Securities Exchange Act of 1934, which governs securities already issued, and includes the laws barring insider trading. Both of these laws are primarily intended to prevent fraud in the securities markets.

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Paul Craig Roberts ~ The Social Cost Of Capitalism

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Paul Craig Roberts May 30 2013

When I was a graduate student in economics, the social cost of capitalism was a big issue in economic theory. Since those decades ago, the social costs of capitalism have exploded, but the issue seems no longer to trouble the economics profession.

Social costs are costs of production that are not born by the producer or included in the price of the product. There are many classic examples: the pollution of air, water, and land from mining, fracking, oil drilling and pipeline spills, chemical fertilizer farming, GMOs, pesticides, radioactivity released from nuclear accidents, and the the pollution of food by antibiotics and artificial hormones.

Some economists believe that these traditional social costs can be dealt with by well defined property rights. Others think that benevolent government will control social costs in the interests of society.

Today there are new social costs brought by globalism. For developed countries, these are unemployment, lost consumer income, tax base, and GDP growth, and rising trade and current account deficits from the offshoring of manufacturing and tradable professional service jobs. The trade and current account deficits can result in a falling exchange value of the currency and rising inflation from import prices. For underdeveloped countries, the costs are the loss of self-sufficiency and the transformation of agriculture into monocultures to feed the needs of international corporations.

Economists are oblivious to this new epidemic of social costs, because they mistakenly think that globalism is free trade and that free trade is always beneficial.

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